Real Time Information — better known as RTI — transformed the way UK employers report payroll to HMRC. Introduced in April 2013, the system requires employers to tell HMRC about employee pay and deductions on or before each payday, rather than waiting until the end of the tax year. For small business owners and sole traders taking on their first member of staff, the acronyms and deadlines can feel overwhelming. But once you understand the two core submission types — the Full Payment Submission (FPS) and the Employer Payment Summary (EPS) — the whole system becomes considerably more manageable.
What Is RTI and Why Does It Matter?
Before RTI, employers submitted payroll information to HMRC annually via a P35 end-of-year return. The problem was that HMRC had no real-time visibility of tax and National Insurance contributions being paid — or not paid — throughout the year. RTI fixed that by requiring electronic submissions every single time you pay someone.
The practical consequence is significant: HMRC can now cross-reference your payroll data with Universal Credit claims, spot discrepancies quickly, and issue penalties for late or incorrect submissions far more efficiently than before. For employees, it also means their tax records update in near real time, reducing the likelihood of unexpected tax bills or repayments at year end.
If you employ even one person — including a family member — and they earn above the Lower Earnings Limit (£123 per week in 2024/25), you are legally required to operate PAYE and submit RTI data. Ignoring this is not an option HMRC takes lightly.
The Full Payment Submission (FPS): Your Core Payroll Filing
The FPS is the submission you make every time you run payroll. It tells HMRC exactly what you have paid each employee and what deductions — Income Tax, Employee National Insurance, student loan repayments — you have made. It also includes the employer's National Insurance contributions due.
Key information reported on an FPS includes:
- Employee personal details (name, date of birth, National Insurance number)
- Gross pay for the period
- Tax code and taxable pay to date
- Income Tax and NI deductions
- Student and postgraduate loan deductions
- Any statutory payments made (Statutory Maternity Pay, Statutory Sick Pay, etc.)
- Payment date and pay frequency
The filing deadline is strict: on or before the date you actually pay your employees. If you pay your team on the 25th of each month, your FPS must reach HMRC by the 25th. A common mistake among new employers is confusing the payment date with the pay period end date — they are not the same thing. Running payroll on the 20th for a period ending on the 31st still means the FPS is due by the 20th, the day payment is made.
Late FPS submissions attract automatic penalties. For employers with 1–9 employees, the penalty is £100 per month of default. For larger teams it rises quickly. HMRC does allow one late filing per tax year without penalty, but do not rely on that goodwill habitually.
The Employer Payment Summary (EPS): When and Why You Need It
Whereas the FPS reports what you have paid employees, the EPS is used to report adjustments that affect the amount you actually pay HMRC. You submit an EPS when there is a difference between what your payroll liabilities appear to be and what you are actually remitting.
Common reasons to submit an EPS include:
- Claiming the Employment Allowance — worth up to £5,000 in 2024/25, this reduces your Employer NI liability and must be claimed via an EPS at the start of each tax year
- Recovering Statutory Payments — if you have paid Statutory Maternity Pay (SMP), Statutory Paternity Pay (SPP), or Statutory Adoption Pay (SAP), you can reclaim a percentage (up to 103% for small employers eligible for Small Employers' Relief)
- No payments to employees — if you did not pay anyone in a given tax month, you must still submit an EPS to tell HMRC you owe nothing, rather than leaving them to chase a missing FPS
- Construction Industry Scheme (CIS) deductions suffered — if your business is a limited company that has had CIS deductions made from payments it received as a subcontractor, these can be offset against your PAYE liability via the EPS
The EPS deadline is the 19th of the following tax month. So if you are claiming back SMP paid during March, your EPS must be filed by 19 April. Missing this deadline means HMRC will collect the full amount shown by your FPS submissions, with no adjustment for your reclaim.
The Year-End Process: P60s and the Final FPS
At the end of each tax year (5 April), RTI has its own year-end routine. Rather than a separate annual return, your final FPS for the year carries an indicator telling HMRC it is the last submission of that tax year. This replaces the old P35 and P14 forms entirely.
You must also issue a P60 to every employee still in your employment on 5 April. This must be provided by 31 May following the end of the tax year. The P60 summarises total pay and deductions for the full year and is a document employees frequently need for mortgage applications, benefit claims, and Self Assessment returns.
When an employee leaves during the year, you issue a P45 — reported to HMRC via the FPS — which tells HMRC the employment has ended and gives the employee their tax information to hand to their next employer.
Platforms such as BizHub365 handle all of this automatically. P60s are generated within the platform at year end, P45s are produced when you mark an employee as a leaver, and both the FPS and EPS are submitted directly to HMRC via the RTI API — no bridging software, no manual uploads, and a clear audit trail for every submission.
Common RTI Mistakes UK Employers Make (and How to Avoid Them)
Even experienced payroll processors make errors. The most frequent issues HMRC flags include:
- Incorrect or missing National Insurance numbers — always verify NI numbers via the employee's P45 or by asking them directly. Temporary NI numbers beginning with "TN" are not valid and will cause matching failures at HMRC.
- Wrong payment date on the FPS — the date must reflect when money actually lands in the employee's account, not when you process payroll internally.
- Forgetting to claim the Employment Allowance — this is not automatic. You must submit an EPS at the start of each tax year to activate it. Many small employers miss out on thousands of pounds of NI relief simply by overlooking this step.
- Not submitting an EPS in a nil-payment month — if your business is seasonal or you temporarily stop paying employees, always file an EPS to inform HMRC. Silence is not an accepted response.
- Using the wrong tax codes — emergency tax codes (such as 1257L W1/M1) should be updated as soon as a P45 or P46 is received. Running an employee on an emergency code for months leads to under- or over-deducted tax and unhappy staff.
Conclusion: Stay Ahead of RTI with the Right Systems
RTI payroll is not optional, and the penalties for non-compliance compound quickly. The good news is that the system is entirely logical once you understand the distinction between FPS (what you paid) and EPS (adjustments to what you owe). Submit your FPS on or before every payday, file your EPS by the 19th when adjustments apply, and keep your employee records accurate from day one.
For small businesses running payroll themselves, the biggest risk is manual error and missed deadlines. Using dedicated software that connects directly to HMRC's RTI API — such as BizHub365, which supports full PAYE, auto-enrolment, statutory payments, and direct FPS/EPS submissions — removes much of that risk and gives you a clear record of every submission made. However you choose to manage payroll, the fundamentals remain the same: accurate data, timely filings, and a clear understanding of what HMRC expects from you as an employer.