Everything UK Employers Need to Know About Payroll & RTI Submissions

Managing payroll in the UK is more than just paying employees on time. It involves strict HMRC regulations, accurate calculations, real-time reporting, and ongoing compliance responsibilities. For many employers—especially small and growing businesses—payroll and RTI submissions can quickly become complex, time-consuming, and risky if handled incorrectly.

This guide explains everything UK employers need to know about payroll and Real Time Information (RTI) submissions, why accuracy matters, and how professional payroll services can help you stay compliant while freeing up valuable time.

What Is Payroll in the UK?

Payroll is the process of calculating and distributing employee wages while ensuring all statutory deductions and reporting obligations are met. In the UK, payroll includes:

• Calculating gross pay, overtime, and bonuses

• Deducting Income Tax and National Insurance

• Managing statutory payments (SSP, SMP, SPP, etc.)

• Producing payslips for employees

• Submitting payroll data to HMRC

• Paying HMRC on time

• Keeping accurate payroll records

Even a small mistake can lead to HMRC penalties, unhappy employees, or compliance issues.

Understanding RTI (Real Time Information)

Real Time Information (RTI) is HMRC’s system that requires employers to report payroll information every time employees are paid, not monthly or annually.

What Must Be Submitted Through RTI?

Each time you run payroll, you must send HMRC:

• Employee pay and deductions

• Income Tax and National Insurance details

• Student loan repayments (if applicable)

• Pension contributions

• Starter and leaver information

RTI submissions must be accurate and sent on or before the employee’s pay date.

Why RTI Compliance Is Critical for Employers

Failing to submit RTI correctly can result in:

• Late filing penalties

• Incorrect tax records for employees

• HMRC compliance investigations

• Issues with employee benefits and tax credits

HMRC uses RTI data to monitor employer compliance in real time, making accuracy and timeliness essential.

Common Payroll & RTI Mistakes UK Employers Make

Many payroll issues arise due to a lack of expertise or outdated processes. Common mistakes include:

• Late or missed RTI submissions

• Incorrect tax codes applied to employees

• Errors in National Insurance calculations

• Misreporting pension contributions

• Failing to update employee details promptly

These errors often occur when payroll is managed in-house without specialist knowledge or dedicated systems.

Payroll and Auto-Enrolment Pensions

Auto-enrolment pensions are a legal requirement for UK employers. Payroll and pensions are closely linked and must be handled together.

Employers must:

• Assess employee eligibility

• Enroll qualifying employees in a pension scheme

• Calculate employer and employee contributions

• Submit accurate pension data

• Maintain compliance with The Pensions Regulator

Incorrect payroll processing can lead to pension compliance failures, which may result in fines.

How Professional Payroll Services Help UK Employers

Outsourcing payroll ensures your payroll and RTI submissions are handled accurately, securely, and in full compliance with HMRC regulations.

Professional payroll services provide:

• Accurate payroll processing

• On-time RTI submissions

• HMRC compliance support

• Payslip generation

• Pension and auto-enrolment management

• Ongoing updates on payroll legislation

This allows employers to focus on running their business instead of worrying about payroll errors or regulatory changes.

Who Should Outsource Payroll?

Payroll outsourcing is ideal for:

• Small and medium-sized businesses

• Startups and growing companies

• Employers without in-house payroll expertise

• Businesses looking to reduce administrative workload

• Employers who want peace of mind with compliance

Even businesses with just a few employees can benefit from expert payroll support.

Payroll Compliance Is an Ongoing Responsibility

UK payroll rules change frequently, including tax thresholds, National Insurance rates, and statutory payments. Staying compliant requires continuous monitoring and updates.

Having experienced payroll professionals ensures your payroll processes remain up to date and aligned with current HMRC requirements.

Final Thoughts

Payroll and RTI submissions are not just administrative tasks—they are legal responsibilities that directly impact your business, your employees, and your compliance standing with HMRC. Accurate payroll processing protects your business from penalties, saves time, and ensures employees are paid correctly and on time.

If payroll is taking up too much of your time or causing unnecessary stress, outsourcing could be the smartest move for your business.

Engage with our payroll services from as low as £25 per month for up to 3 employees and £2.00 for any extra employee per processing.

Contact Us

Get reliable, compliant, and stress-free payroll support tailored to your business needs.

Frequently Asked Questions (FAQs)

What is RTI in the UK payroll?

RTI (Real Time Information) is HMRC’s system that requires employers to submit payroll information every time employees are paid. This includes wages, tax deductions, National Insurance, and pension contributions. RTI submissions must be sent on or before the employee’s pay date.

Is RTI submission mandatory for all UK employers?

Yes. All UK employers running payroll must submit RTI reports to HMRC, regardless of business size or number of employees. Even small businesses with one employee are required to comply.

What happens if RTI submissions are late or incorrect?

Late or incorrect RTI submissions can lead to HMRC penalties, incorrect tax records for employees, and compliance checks. Repeated errors may increase the risk of investigations and fines.

How often do employers need to run payroll?

Payroll is typically run weekly, fortnightly, or monthly, depending on the business and employee contracts. RTI submissions must be made every time payroll is processed.

Can small businesses outsource payroll in the UK?

Yes. Many small businesses outsource payroll to ensure accuracy, compliance, and time savings. Outsourcing is often more cost-effective than managing payroll in-house.

Does payroll include pension auto-enrolment?

Yes. Payroll and auto-enrolment pensions are closely linked. Employers must assess eligibility, calculate contributions, and report pension data accurately as part of payroll processing.

How long should payroll records be kept?

UK employers must keep payroll records for at least three years. These records may be requested by HMRC during compliance checks.

What are the benefits of using professional payroll services?

Professional payroll services help ensure accurate calculations, timely RTI submissions, compliance with HMRC rules, reduced administrative workload, and peace of mind for employers.