HMRC have introduced a new system for reporting PAYE for large and small businesses including Limited Companies. The changes took effect from April 2013 with the main objective to enable more accurate PAYE reporting. The more accurate the information, the better the chance that employees will be on the correct tax code and ideally less mistakes will be made by HMRC..
RTI is an abbreviation for ‘Real Time Information’ and what this really means is that since April 2013, the implementation of the new system, HMRC now receives information on employers PAYE per pay period, rather than receiving it all at once at the end of the tax year.
By receiving Pay As You Earn information in real time, HMRC have the opportunity to pick up on and amend any errors as they occur, rather than trying to reconcile a backlog of errors and inconsistencies at the end of the tax year. This decreases the likelihood of you being lumped with an unexpected penalty. As the director of a Limited Company however, you do have to report your PAYE salary when it is paid to you as an employee of your Company.