What Is RTI and How Does Real Time Information Payroll Work?

Real Time Information — commonly known as RTI — is the system HMRC uses to collect payroll data from UK employers throughout the tax year, rather than waiting for a year-end report. RTI does real time information submission: every payday, you submit details of who you've paid, what tax you've deducted, and how much National Insurance was withheld. It's not optional, and it's not complicated once you understand the rhythm. But get it wrong, and HMRC will fine you. This guide explains what RTI is, what you need to submit, when to submit it, and why your payroll software should handle it automatically.

What is RTI anyway?

Before RTI arrived in 2014, UK payroll worked like this: you ran payroll all year, kept meticulous records, and submitted everything to HMRC in one massive lump at the end of the tax year (5 April). Auditors loved this. Small-business owners hated it. HMRC couldn't spot errors until months after the fact.

RTI flipped the model. Instead of waiting until year-end, you submit a report to HMRC on or before every payday. No lump sum in April. No surprises in summer. HMRC gets real-time visibility into who's earning what, how much tax is being collected, and whether anyone's trying to claim benefits they're not entitled to.

From HMRC's perspective, this is brilliant. It lets them:

Collect the correct amount of tax right now, not rectify it later
Spot underpayments and fraud faster
Administer tax credits and Universal Credit accurately
Send the right tax code to each employee sooner

For you as an employer, it means smaller, more frequent submissions — and if your payroll software is any good, you barely notice they're happening. If it's not good, you've got a compliance headache.

What you need to submit

RTI submissions come in three flavours. You'll use two of them regularly.

Full Payment Submission (FPS)

An FPS is the main one. You send it on or before every payday with details of every employee on your payroll for that period:

Employee name, address, date of birth, National Insurance number
Tax code and NI category
Gross pay for the period
Income tax and employee National Insurance deducted
Employer National Insurance contributions
Pension contributions and student loan deductions (if any)
Statutory pay (Statutory Sick Pay, Statutory Maternity Pay, etc.)
Whether someone is a new starter or a leaver, with relevant dates

If you run weekly, monthly, or bi-weekly payroll, you send an FPS each time. If you have 50 employees, each FPS contains 50 employee records. HMRC gets all of this electronically—no forms, no envelopes, no P6 chasing.

Employer Payment Summary (EPS)

The EPS is for things that don't fit on an FPS. You send it when you need to claim Employment Allowance, recover statutory payments (like SMP that you're reimbursed for), report Construction Industry Scheme deductions, or correct something from a previous submission.

You don't send an EPS every month—only when there's something to report. A typical small business might send one per tax month; larger ones might send one per week.

Earlier Year Update (EYU)

If you discover an error after the tax year has closed (5 April), you submit an EYU to put it right. This is rare unless you made a significant mistake—and if you're using decent payroll software, it's extremely rare.

When you need to submit (and what happens if you don't)

The rule is simple: FPS on or before payday. EPS by the 19th of the following tax month. Simple rule, serious penalty if you break it.

If you pay monthly on the 28th, your FPS must be submitted by 28th—not the 29th, not the 30th. If you're abroad, that's still 28th UK time. Most employers build this into their payroll routine: process payroll on the 27th, submit the 28th, pay the 29th. Your payroll software should handle the submission automatically as part of finalising each pay run.

Late submissions cost real money

HMRC penalties for late RTI are tiered by PAYE scheme size. For a single-employee PAYE scheme, the penalty is modest. For a 30-person business, a late FPS costs more. For a 100-person business, you're looking at a sizeable fine. "Sizeable" means hundreds of pounds per month that you miss. And if you're consistently late, the penalty compounds.

There are narrow exceptions—your first-ever FPS submission gets some leeway, and brand-new employers get 90 days—but otherwise, assume the deadline is hard.

What if there's no payroll that month?

If you're seasonal (a holiday let closed in winter, a grotto with no Santa to pay), and you have a tax month with zero employees to pay, you still need to tell HMRC. Submit an EPS with a "nil" flag, and HMRC won't expect an FPS and won't fine you for one missing. This is important: silence is not golden in RTI. HMRC expects an FPS every month unless you explicitly say there isn't one.

How the submission actually works

Here's what happens behind the scenes:

You process payroll. Calculate gross pay, tax, NI, pension, student loans, expenses—all the moving parts.
Your software generates the FPS. It pulls the data from your pay run and formats it into HMRC's XML schema (don't worry, you never see the XML).
The FPS is submitted electronically via the Government Gateway. No manual upload, no clicking a "submit" button (unless you want to)—most modern software just does it as the final step of finalising a pay run.
HMRC receives and validates it. They check that employee details match their records, that figures are sensible, and that nothing's obviously wrong.
You get an acknowledgement. HMRC sends back a receipt confirming they received it. If there's a problem, they send back error codes telling you what to fix.
Corrections are resubmitted the same way. If there's an error, you correct it in the next pay run and submit again.

The whole process is invisible if you're using payroll software worth its salt. The FPS pops out automatically, HMRC accepts it, and you move on. If you're manually creating spreadsheets and uploading them, you're making life unnecessarily difficult—and you're risking errors that will trigger penalties.

Why payroll software is non-negotiable for RTI

Let's be direct: if you have more than one or two employees, doing RTI manually is a penalty waiting to happen.

RTI requires electronic submission in a specific XML format, it has tight deadlines, and it contains dozens of data fields that must be correct. Hand-keying this into a Government Gateway form is like threading a needle in the dark. It's not impossible, but you'll do it wrong eventually.

Decent payroll software—like Relentify, like Xero, like QuickBooks—handles all of this. When you finish entering hours and calculating pay, the software generates the FPS automatically. You review it, spot-check a few lines, and submit with one click. The software validates the data before submission (catching mismatched NICs or missing employee details), logs every submission for audit, and tracks HMRC's acknowledgements.

If you're running payroll for directors and dividends, or managing multiple pay frequencies, or dealing with employee expenses, your software should fold RTI submission into all of that seamlessly. It should not be a separate, fiddly process bolted on the side.

Common RTI mistakes and how to avoid them

Employee details don't match HMRC's records

HMRC validates your FPS against their own records. If you say an employee's National Insurance number is AA123456B and their records say AA123456A (or if you've got their date of birth wrong), the submission may be rejected or flagged for investigation.

How to fix it: When someone joins, verify their details carefully. Check their P45 from their previous job (it has their NI number and date of birth). Ask for their passport if there's any doubt. Store these correctly in your payroll system. Before hiring, run a Right to Work check—it's a legal requirement anyway, and it forces you to verify identity documents.

Applying the wrong tax code

Tax codes change. HMRC issues them throughout the year (when someone gets a new job, a promotion, a pension payment, or a benefit). If you apply the wrong code, you'll deduct the wrong amount of tax. The employee ends up over- or under-paying, and it all comes out in the wash at the end of the year—but it creates a headache for them and an audit trail you'd rather not have.

How to fix it: Use payroll software that pulls tax code updates from HMRC electronically. Most modern platforms do this automatically. If you're using older software or spreadsheets, check for code updates weekly.

Missing an FPS or submitting late

If you process a pay run but the FPS doesn't get submitted (software glitch, network issue, you forget to click submit), HMRC will assume you haven't paid anyone that period. This triggers an investigation, which costs time and potentially a penalty even after you correct it.

How to fix it: Use software with submission logs so you can verify that each FPS was actually sent. Check the Government Gateway to see HMRC's acknowledgements. If a submission fails, resubmit it immediately—don't wait until the next pay run.

Missing the year-end deadline

On 5 April (the end of the UK tax year), you send a final FPS with a "final submission of the year" flag. If you're claiming Employment Allowance or have statutory payment recoveries, you send a final EPS too. Miss this deadline or forget the "final" flag, and you've created a gap in HMRC's year-end records. They can't issue P60s to your employees, and they might investigate whether you actually paid anyone.

How to fix it: Your payroll software should prompt you to mark submissions as "final" in April. Some platforms do this automatically. Don't skip the year-end process, even if you're sure all the data is already submitted.

RTI and new starters

When you hire someone, their first appearance on an FPS includes starter information: their name, date of birth, NI number, whether they have a P45 from their last job, and (if applicable) which Student Loan Plan they're on.

If they brought a P45, you've got most of the information already. If they don't have one, they fill in a Starter Declaration, and you apply a standard tax code until HMRC sends you the right one.

All of this goes on the FPS. HMRC uses it to update their records about this person, and to send you the correct tax code.

RTI and leavers

When someone leaves, their final pay slip goes on an FPS marked as "final" for that employee, with their leaving date. You also generate a P45 from your payroll software (based on the year-to-date figures reported through RTI) and give it to them. They'll use it with their next employer.

Penalties at a glance

Late FPS: Fixed penalty per month per PAYE scheme (larger schemes = larger penalties)
Late payment of PAYE/NI: Interest on the unpaid amount, plus penalties if it's a pattern
Inaccurate submissions: If your RTI underpaid tax, HMRC will recover it, and you may face a penalty

The penalties are detailed on the HMRC penalties page. They're not trivial, especially if you run multiple pay runs per month.

Frequently Asked Questions

Q: Is RTI the same as PAYE? No. PAYE is the system by which you calculate and deduct tax from employees' wages. RTI is how you report that PAYE data to HMRC. PAYE is the calculation; RTI is the submission.

Q: Can I submit RTI manually without software? Technically yes, via the Government Gateway. Practically, no. The data volume and complexity make manual submission error-prone. For even a handful of employees, payroll software is essential.

Q: What if HMRC rejects my FPS? They send back error codes saying what's wrong—usually mismatched employee details, a missing field, or a data format issue. You correct it in your software and resubmit. Most errors are caught and fixed within a day or two.

Q: How far back can I correct an RTI submission? You can correct the current tax year freely. For previous tax years, you use an EYU (Earlier Year Update). HMRC allows corrections up to four years after the end of the tax year, but it's better to catch and fix errors quickly.

Q: Do I need to keep a record of submitted FPS data? Yes. Your payroll software should log every FPS and HMRC's acknowledgement. This is your audit trail. Keep these records for at least six years (or longer if you're VAT registered—you need VAT records for that timeframe anyway).

Q: What happens if I close my PAYE scheme mid-year? You submit a final FPS and EPS with an end-of-scheme flag, and you send a notification to HMRC that you're closing the scheme. Your software should support this—it's a one-time process.

Q: Can I use integrated payroll and HR software to avoid RTI? No, RTI is mandatory for all UK employers. But integrated software (which combines payroll, HR, and timekeeping) makes RTI submission simpler because payroll data and employee records are in one place. There's no double-entry, no mismatches between systems.

RTI is not rocket science. It's a reporting requirement with a simple rhythm: process payroll, submit data on payday, repeat. The risk isn't in understanding RTI—it's in missing deadlines or getting employee details wrong. Use payroll software that handles RTI automatically, verify your employee data when they join, check for tax code updates weekly, and mark submissions as final at year-end. Do those four things, and you'll stay compliant and penalty-free. If you're building your payroll from scratch, read our step-by-step guide to processing your first payroll run. And if you're currently wrestling with RTI across multiple spreadsheets, that's exactly the kind of low-value admin that payroll software is built to solve.