PAYE & RTI Explained: How UK Directors Must Report Payroll to HMRC

Introduction: PAYE & RTI in Plain English

Every employer in the UK — whether running a limited company with staff or paying themselves as a director — must operate PAYE and comply with Real Time Information (RTI) reporting. These systems are designed to ensure that Income Tax, National Insurance, and other deductions are collected on time.

For directors, the rules can feel unnecessarily rigid, especially with HMRC’s “on or before” submission requirement. Yet failure to follow them precisely can result in fines, interest charges, and unwelcome HMRC scrutiny.

This article explains PAYE and RTI in clear terms, highlights the key reporting deadlines, and shows why accuracy is essential for every employer.

How PAYE Works for Directors & Employees

• Employees: PAYE deducts Income Tax, National Insurance, student loans, and pension contributions directly from wages before payment.

• Directors: PAYE applies too, but with special rules. Director NIC can be calculated on an annual basis (spreading liability evenly across the year) or an alternative basis (like normal employees, switching to annual at year-end).

Directors who misunderstand this often end up underpaying or overpaying NIC — creating compliance risks and cashflow headaches.

RTI Reporting Rules (“On or Before”)

HMRC requires employers to submit payroll data on or before each payday through RTI.

• Full Payment Submission (FPS): Sent every time staff (or directors) are paid, showing gross pay and deductions.

• Employer Payment Summary (EPS): Used to report adjustments, such as statutory pay claims or Employment Allowance.

Missing even one RTI deadline can result in fines — even if the PAYE/NIC is paid on time.

Key Payment Deadlines for PAYE/NIC

• Monthly PAYE/NIC due: By the 22nd of the following month (electronic payment).

• Quarterly option: If the total monthly liability is less than £1,500, smaller employers may pay quarterly.

• Year-end obligations:

  
  

  • P60 to employees by 31 May.

  • P11D & P11D(b) for benefits by 6 July.

  • Class 1A NIC on benefits by 22 July (if electronic).

Why Accurate RTI Matters

HMRC uses RTI submissions to:

• Match PAYE/NIC payments with payroll records.

• Ensure employee tax records are correct.

• Track compliance for penalties.

Errors or delays can trigger:

• Late filing penalties starting from £100 per month.

• Daily penalties for persistent failure.

• Interest charges on underpaid PAYE/NIC.

• Risk of HMRC audits.

How Wexley & Associates Helps

Directors don’t need to juggle PAYE deadlines, RTI submissions, and compliance risks alone. At Wexley & Associates, we:

• Run PAYE accurately for both directors and employees.

• Manage RTI submissions so they’re always filed correctly and on time.

• Optimise director pay to balance salary, dividends, and NIC efficiently.

• Provide peace of mind by keeping clients compliant with HMRC at every stage.

Call-to-Action: Keep PAYE Simple, Stay HMRC-Compliant

Don’t risk fines or stress over payroll mistakes. With expert support, PAYE and RTI can be managed seamlessly while you focus on running your business.

Contact Wexley & Associates today to simplify your payroll and safeguard your compliance.

References

• HMRC: PAYE and payroll for employers

• HMRC: Reporting payroll information to HMRC

• Related Wex Insider article: Payroll & Employers: The UK Director’s Compliance Guide