RTI How-To: Filing for free with Basic PAYE Tools, image of someone working | Crunch

Real Time Information (RTI) is the biggest change to PAYE since it was introduced in 1944. Billed by HMRC as a new and improved way of reporting that will streamline the payroll process, it requires employers to submit PAYE reports every time an employee is paid, instead of just once a year.

This has a number of consequences for limited company freelancers. The strict framework and procedures that must be followed mean that there’s an increased administrative burden. More importantly, if you neglect to make RTI submissions, you will be charged a fine.

Fortunately, HMRC have released online tools that make it relatively easy for you to make RTI submissions for free, as well as encouraging UK businesses to sign up to its Make Tax Digital initiative.

1. Download

Visit the HMRC website here to download the free PAYE tools. There are a number of packages depending on which operating system you use. Note that the first time you open the application it may take a while to load. This is normal so just be patient!

2. Add yourself as an employer

Once you have downloaded and installed the software, you’ll have to add yourself as an employer. Before you do this you’ll need to already have a PAYE scheme set up (if you run your business through a limited company you’ll already have one), which you can do yourself on the main HMRC website. Note that it will take 5-7 days for you to have your PAYE reference sent to you.

There’s quite a lot of information for you to fill in, but it should all be information that you know already about your business. Take your time and make sure all the details are correct.

Once you’ve completed the form, click next, and a confirmation screen like this should appear. Congratulations – you’ve set yourself up as an employer!

3. Manage employees

Once you’ve added yourself as an employer, you can start adding employees. Obviously for freelancers this will just be, err, yourself.

You’ll need to add quite a lot of information about yourself but, again, it should all be stuff you know or have close to hand.

Once an employee is added, Basic PAYE Tools will allow you to add them to a payroll, run payrolls to pay yourself, and submit Final Payment Submissions forms. Time to get that salary flowing!

Security warning

Unfortunately, HMRC haven’t designed this free software to be password protected. A lot of sensitive information is stored within it, so it’s recommended that you install it on a computer which can be kept adequately secure.

Year-end process

There will be additional work for you to do at your company Year End. For those of you who have run payrolls previously, the introduction of RTI means you no longer need to submit a P35.

Instead, you will need to file Final Payment Submissions through the HMRC software. You have the option on the payroll tool to make this your final payroll of the year, after which additional questions will appear for you to complete.

Fines and penalties

You’re liable to pay in-year interest on any in-year penalty payments not made by the due date.

How we can help

If you’d rather not have to deal with HMRC and their PAYE tool, then we’ve got good news! As a Crunch client, you can set up automatic payroll and let us take care of HMRC for you with our accounting software.

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Lucinda Watkinson
Head of Accounting
Updated on
December 4, 2019

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