New starter procedures and RTI

Under Real Time Information (RTI), as soon as you make a payment to a member of staff, you’ll be required to inform HM Revenue & Customs (HMRC).

Even prior to its launch, preparing for this change in procedure is causing employers no end of headaches across the board, but one area where it is going to have a real effect is with new employees or new starters.  With a workforce that is more mobile than (pretty much) ever before, it’s important in the run-up to RTI to establish effective and efficient new starter procedures.  In order to help you, we’ve prepared this brief guide.

1. When an employee is paid for the first time then their details must be sent with the next Full Payment Submission under RTI. When those details are submitted then one of 3 statements are made:
   • Statement A – This is their first job since last 6 April and they have not been receiving taxable Jobseeker’s Allowance, Employment and Support Allowance, taxable Incapacity Benefit, state pension or occupational pension.
   • Statement B – This is their only job, but since last 6 April they have had another job, or have received taxable Jobseeker’s Allowance, Employment and Support Allowance or taxable Incapacity Benefit. They do not receive a state or occupational pension.
   • Statement B – They have another job or receive a state or occupational pension.
2. If you haven’t created one already, you should develop a way of gathering the information needed for each employee. HMRC provide a Starter Checklist for this purpose.  Ideally, this should be part of your induction or first-day recruitment process.  You’ll need to go through this, which is the equivalent of the old P46 process, even if your new starter has a P45.  In broad terms, this process will help you gather and record the following information:
   • The starter’s start date.
   • Their Starting Declaration.  This concerns whether or not this is their first job or their only job as well as gathering information about benefits and pensions.
   • Whether or not they have a student loan.  If they have a student loan, fall within the appropriate timescales and aren’t making payments by direct debit, then you’ll be responsible for making student loan deductions from their pay.
   • Their personal information: full name, address and date of birth, as well as their National Insurance number.
3. If the employee has a P45, this will help you ascertain the emergency tax code you will need to use if the P45 doesn’t relate to the period 6th April 2013 and 5th April 2014.  Here are the applicable tax codes (although you should check HMRC website for full detail):
   • For P45s that relate to leavers before 6th April 2012 and starters on or after 6th April 2013, the code is 944L for the tax year 2013/2014.
   • For P45s that relate to leavers between 6th April 2012 and 5th April 2013 and starters on or after 25th May 2013, the code is also 944L.
   • For P45s that relate to the periods in between (leavers between 6th April 2012 and 5th April 2013 and starters between 6th April 2013 and 24th May 2013, you should use the tax code shown on the P45 and then add 134 points, if the code features an L, without carrying forward any markings.
4. Where the employee has a P45 but has more than one job then instead of selecting statement C and operating code BR, the employer should select statement B and operate the tax code on the P45 – unless the tax code on the P45 is BR, 0T or D prefix – in which case statement C will still apply.

In addition to these procedural changes for new starters, it’s important that you make sure you are conversant with the time you have to submit the necessary information, as well as the information that is required before making any submission to HMRC.  These steps, along with verifying the information you are given by your new employee will help streamline your RTI responsibilities.

If the thought of creating a new starter policy fills you with dread, why not get in touch?  We can help demystify the process for you and help you make sure you stay ahead of your RTI obligations.