RTI compliance UK requirements have been part of payroll since April 2013, yet they still trip up small employers. If you run a micro business, work as a freelancer with staff, or pay yourself a salary through a limited company, Real Time Information (RTI) reporting is not optional. HMRC receives a Full Payment Submission (FPS) every time you pay someone through PAYE, and missing deadlines can lead to penalties that eat into already tight margins.

Many women-led businesses in the UK start as sole trader ventures and later become limited companies or take on their first employee. Getting RTI right from the start protects your cash flow and keeps your relationship with HMRC straightforward. You can find broader context on the state of women-led enterprise in our Women in Business: Key UK Facts page.

What RTI is and why it matters

RTI stands for Real Time Information. It is the system HMRC uses to collect Pay As You Earn (PAYE) data each time you pay your employees, rather than once a year at the end of the tax year. Under RTI, employers must submit a Full Payment Submission (FPS) to HMRC on or before every payday. The FPS includes each employee’s pay, income tax, National Insurance contributions, student loan deductions, pension contributions and other statutory deductions.

Before RTI, employers submitted PAYE information annually. RTI moved the process online and made it part of the normal payroll cycle. This gives HMRC up-to-date information, reduces errors in tax codes, and helps ensure Universal Credit and other benefit payments are based on current earnings.

Who RTI applies to

RTI applies to anyone operating a PAYE scheme. If you are an employer and pay staff through PAYE, you must comply with RTI, regardless of how few people you employ.

This includes:

• Micro businesses with one or more employees.
• Freelancers and contractors who have taken on staff.
• Limited company directors who pay themselves a salary through PAYE.
• Charities, clubs and other organisations that run a PAYE scheme.

You must register as an employer with HMRC if you pay any employee £123 a week or more, the Lower Earnings Limit for National Insurance in 2025/26 (HMRC, 2025). If you do not operate PAYE, for example because you are a sole trader with no employees and pay yourself through drawings, RTI does not apply. However, the moment you take on an employee or become a director of a limited company and pay a salary, you must register and start reporting through RTI.

RTI compliance UK: steps for small employers

Compliance is straightforward once the right systems are in place. The core requirement is to report payroll information to HMRC on or before each payday.

1. Register as an employer

You must register with HMRC as an employer before you run your first payroll. HMRC will send you an employer PAYE reference and an Accounts Office reference. You need both to make submissions and payments. Registration can take up to five working days, so do this before your first payday.

2. Run payroll and submit an FPS

Each time you pay an employee, send an FPS to HMRC on or before the date the employee is paid. The FPS covers all employees paid in that pay run, even if their pay is zero for the period. You must continue sending FPSs throughout the tax year, including for directors who receive a salary.

3. Send an EPS if needed

If you have no employees to pay in a particular tax month, or if you need to reclaim statutory payments such as Statutory Maternity Pay or claim Employment Allowance, submit an Employer Payment Summary (EPS). The EPS is usually due by the 19th of the following month. For 2025/26, HMRC sets the Employment Allowance at £5,000, which can reduce your employer Class 1 National Insurance liability (HMRC, 2025).

4. Pay HMRC on time

You must pay the PAYE tax and National Insurance you owe by the deadline. For most employers, payment is due monthly by the 22nd if paying electronically, or the 19th if paying by post. Quarterly payment arrangements are available for employers whose monthly PAYE and National Insurance liability is below £1,500, but you must still report each payday (HMRC, 2025). Remember that wages must also meet the National Living Wage, which the government set at £12.21 an hour from April 2025 for workers aged 21 and over, following Low Pay Commission recommendations (Low Pay Commission, 2025). See our guide on National Living Wage £12.21: what women founders pay.

Software options for RTI submissions

RTI submissions must be made using HMRC-recognised payroll software. HMRC does not accept paper returns for routine PAYE reporting. Your main options are:

• HMRC Basic PAYE Tools, a free package from HMRC for employers with fewer than 10 employees. It handles FPS and EPS submissions and suits very small businesses with straightforward payrolls.
• Commercial payroll software, cloud and desktop packages from providers such as Xero, QuickBooks, Sage and FreeAgent calculate pay, tax and National Insurance automatically and submit RTI returns directly to HMRC. Choose software that is HMRC-recognised and includes updates for the current tax year.

If you already use bookkeeping software with an integrated payroll module, check that it is RTI-compliant and that your subscription includes the latest tax-year updates. Using outdated software can lead to rejected submissions and penalties. Many women founders start with free HMRC tools and move to commercial software as their team grows.

Penalties for missing RTI deadlines

HMRC charges penalties for late FPS submissions. The amount depends on the number of employees you have and how late the submission is. For each quarter in which an FPS is late, HMRC’s penalty is (HMRC, 2025):

• £100 if you have 1 to 9 employees.
• £200 if you have 10 to 49 employees.
• £300 if you have 50 to 249 employees.
• £400 if you have 250 or more employees.

If an FPS is more than three months late, additional daily penalties of £10 per day may apply for up to 90 days. Further penalties can be charged after six and twelve months. Inaccurate returns can also attract penalties of up to £3,000, and late payment of PAYE liabilities can lead to interest and penalties (HMRC, 2025).

HMRC may be more lenient if you have a reasonable excuse and report the issue promptly, but relying on this is risky. The simplest way to avoid penalties is to submit your FPS on or before every payday and pay what you owe on time.

Director PAYE and annual reporting

If you run a limited company and are the only director on the payroll, you still have to comply with RTI. However, HMRC allows some directors to be paid annually and to submit just one FPS a year. You must register for an annual PAYE scheme in advance and ensure the FPS is submitted on or before the date the director is paid. If you pay yourself more frequently, you must report each payment as it is made.

This is particularly relevant for women founders who structure their income through a small salary and dividends. If you pay yourself a director’s salary, even a small one below the National Insurance threshold, you must still report it through RTI if you are registered for PAYE. For more on optimising your director pay, read our guide on how to pay yourself as a limited company director in 2026.

RTI tips for micro businesses and freelancers

• Put payroll dates in your diary and treat RTI submissions as part of the same task as paying staff.
• Check that your payroll software is HMRC-recognised and updated for the 2026/27 tax year.
• Keep accurate records of employee details, hours, pay and deductions for at least three years from the end of the tax year they relate to (HMRC, 2025).
• Reconcile your HMRC PAYE account regularly so you spot missed submissions or unexpected charges.
• If you are unsure, speak to an accountant or HMRC’s employer helpline rather than guessing.

Keep your RTI reporting on track

RTI compliance UK is now a routine part of running a business with employees. By registering as an employer, using HMRC-recognised software, and submitting your FPS on or before every payday, you can meet your obligations with minimal fuss. Staying organised and acting promptly will help you avoid penalties and keep your payroll running smoothly as your business grows.