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Reporting payroll information in real time

Posted 6 years ago in Xero news by
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Photo_smallerMegan Caywood is the Product Manager for UK Payroll at Xero.

In April of 2013, the UK saw the biggest change to the tax system in nearly 70 years – Real Time Information (RTI).

Historically, the British government has implemented such changes in response to economic conditions, with the goal of increasing efficiency in the system. The first major change came in 1944 under Winston Churchill, when the growing number of taxpayers during world war II led to the need for a more efficient tax collection system. The result was Pay As You Earn (PAYE), a system in which tax and national insurance deductions are made each pay period.

However, the system was designed when it was common for people to have just one job for most of their life, and so reporting was still on an annual schedule. Now, not only do many people change jobs more frequently, but they also are more likely to have multiple employments or pensions, as well as complex benefits and expenses packages.

RTI payroll software

Over the past few years, HMRC has worked to introduce another major change: Real Time Information. Under RTI, employers must use payroll software to electronically send HMRC tax information each time they pay their employees. This means that the government is able to keep up-to-date information about employment and pension income despite the increased frequency of job changes, and can therefore maintain more accurate records and better ensure that people pay the correct amount of tax.

The introduction of RTI has meant that employers have had to rethink their approach to payroll reporting. For some, this meant designing new policies and procedures to capture the newly required information, while for others it meant changing their existing payroll system.

Seamless payroll & accounting that’s easy to use and RTI compliant

Here at Xero, we understand that a smooth-running payroll system is vital to the success of any small business, so Xero users have the ability to integrate with HMRC accredited payroll software providers in our Add-On Marketplace.

In addition, we’ve begun working to build out UK payroll in Xero that’s easy to use and RTI compliant. UK Payroll in Xero will seamlessly update the general ledger, meaning that whenever you process a pay run, the information will show immediately in the accounting system without having to export data.

Here’s a sneak peek of what we’re working on:
RTI UK Payroll Overview






We’re working hard to make this a reality. As we get closer to the end of 2014 and into early 2015 we’ll share and update you on what will be available and when.


Colin Hewitt
September 24, 2014 at 10.09 pm

Hi Megan.
This is great news.
I was working with a customer the other day who was using one of the add-ons and I was looking for some info on the Xero help site about how to reconcile the output from the payroll add-ons when it comes into Xero (as a bill).

It would be great if you could point to a few recommended ways to run the reconciliation (as marking off 45 sub payments against the bill – clearly wasn’t working).

It made me realise if someone can come up with an add-on to handle making these payments by BACS that will be a huge time saver for businesses.

Keep up the good work.

Chris Dale
September 25, 2014 at 6.58 am

Hi Megan,
Looks great, can’t wait!
My clients are currently using Add-On partner MYPAYE which works quite well but they would love it to be within Xero.
When do think it will be released live in Xero?? It will be a big draw for even more UK clients.
Glad to see your dedicated Product Manager, your historic summary is excellent.
Many thanks

Campbell Yule
September 25, 2014 at 4.46 pm

So pleased to see this on the Radar… I use Xero Payroll in Australia so can’t wait to be able to also use it for my UK business – the third party software I use works OK but doesn’t handle everything I need.
This improvement can’t come soon enough!

Craig Mills
September 25, 2014 at 11.03 pm

Will a bureau version be avaliable at any time in the future?

Tom Thomas
September 26, 2014 at 2.51 am

Has auto enrolment been considered because it won’t be long into 2015 when all small businesses will be looking at this.

Megan Caywood
September 26, 2014 at 8.00 am

Thanks everyone for your comments and feedback. Great to see the excitement for it!

@Colin – In regards to reconciling the output from the payroll add-on: currently, Xero UK simply records the totals and the payroll payments need to be worked out and completed externally. We’re actively exploring a better solution, and I’ll pass on your feedback to the Add-On partners team as well. Thanks again for your feedback!

@Chris – Thanks! That’s great to hear. We’re in the early stages of development, but we’ll provide an update on what will be available and when as get closer to the end of 2014 and into early 2015, so check back!

@Campbell – Thanks for the comment! Glad you’re excited about.

Megan Caywood
September 26, 2014 at 9.01 am

@Craig – Payroll in Xero is designed for small businesses to self-service their payroll needs easily. They will of course be able to invite their advisor to manage it on their behalf. At this stage we don’t have any plans for a payroll bureau type service.

@Tom – Definitely. We realize autoenrolment is top of mind for employers and are taking this into consideration. We’re still in the early stages of development, but we’ll provide an update as to what will be available and when as we get closer to the end of 2014 and into early 2015. Thanks for your feedback!

Robert Bishop
September 28, 2014 at 4.36 am

Hi Megan,
This is good news!
Will it be able to handle CIS payments?

Chris Dixon
September 30, 2014 at 3.08 am

Advisers might want (or need) something by way of bureau functionality. Also need to be able to keep client users away from anything they can break so user roles will be important. Crucially, where will the data live? Holding UK personal payroll data in Texas could be a big data protection issue, so a clear policy and reassurance will be needed.

Martin Truman
September 30, 2014 at 9.00 am

Having just completed what seems to have been a flawless transfer from Sage to Xero this weekend I’m excited to be a new Xero convert. My accountant seems pretty excited to be her first xero guinea pig too! Look forward to seeing the Payroll and auto enrolment bolt on in 2015. Keep on innovating!

Gillian French
September 30, 2014 at 9.19 pm

So pleased to hear this as we had transferred ALL our clients onto Paysuite only to be told last week that Intuit had bought Paysuite and therefore it would cease after the 2014/15 payroll year.

Megan Caywood
October 1, 2014 at 1.59 pm

@Robert – Thanks for your comment. We know CIS is important to many of our customers so we’re exploring multiple ways of supporting it, either through the core product or through payroll. At this point we’re still in the early stages of development, so we’ll provide an update on what will be available and when as we get closer to 2015, so check back for updates.

@Chris – Great comments, thanks for your thoughts and feedback. Payroll in Xero is designed for small businesses, and so it won’t be the best solution for users who are looking for bureau-type functionality. It’s great to hear from customers about what they want/need and we’re definitely keeping those things in mind as we build.

@Martin – Awesome! Glad to see new Xero converts 🙂

@Gillian- Thanks for the feedback, looking forward to having you use Xero UK payroll next year!

Malcolm Veall
October 8, 2014 at 9.48 am

There will be many of us who bought into PaySuite as a solution who will have to have another solution in place ahead of 15/16 tax year. I know that you have to be cautious and not commit to a schedule there is any chance of you not hitting but we have to know whether Xero payroll will be live by 6th April 2015 – having left desktop software solution X to PaySuite we cannot consider migrating to AN Other software and then again into Xero payroll – 4 payroll software programs in 4 years – not a chance!

Megan Caywood
October 16, 2014 at 11.32 am

@Malcolm – Totally understand. We’re working hard to launch UK Payroll by March 2015 so that it’s ready to use for the 15/16 tax year – we can’t promise that date at this point since we’re still early on in development, but we do realize that you need to make plans and will strive to keep you updated on progress so that you have plenty of time to prepare one way or the other. Check back for updates as we get closer to the end of 2014 and into early 2015!

Ed G
November 29, 2014 at 10.33 am

Almost 2 years since RTI now! I’ll have to switch to FreeAgent after 5 years with Xero if we don’t have RTI by April 2015.

Stuart McIntyre
December 8, 2014 at 7.53 pm

Thanks for this, Megan.

The screenshots do look good but like a lot of others, I’m perturbed by the lack of accurate timescales, news of a beta program, full feature list etc.

We’ve been waiting a very long time for this ‘new payroll solution’ (to fix issues with PAYE refunds amongst other issues), and yet it looks as though you are still deep in the development cycle versus preparing for release?

Given we are now getting very close ‘to the end of 2014’, can we please have a firm date that you’re aiming at?

Megan Caywood
December 9, 2014 at 1.14 pm

@Stuart and @Ed: We realize that there is a huge demand for payroll in Xero for the UK and we’re working hard to meet that demand before the start of the next tax year (April 2015). We haven’t publicly announced the specific launch date yet, but we understand that our customers will require time to transition and have built that into our release timeline. Thank you so much for your patience, more updates to come real soon, I promise. 🙂

Kev Yates
December 10, 2014 at 3.08 am

I hope you manage it, as I started to use Paysuite as a Xero add-on, but that is being taken offline with effect from April so a decent replacement will definitely be needed.

Megan Caywood
December 10, 2014 at 10.50 am

@Kev – definitely. I saw the Service Notice that was sent out to PaySuite users last October, so we realise it’s especially important to those of you currently using that Add On for payroll. Thank you for your comment!

Chris Dixon
December 16, 2014 at 9.43 pm

UK Payroll is not a trivial implementation/migration, especially for larger small businesses. Nor is it a walk in the park to acceptance test and get HMRC accreditation. So if its not released by 1 March it will arguably be too late for the start of the 2015-16 tax year. Working back from that (2 1/2 months away) I’d say Xero need to be in a go/no-go position for a March release by end Jan. Can we have some commitment to an announcement by then either way?

Megan Caywood
December 18, 2014 at 6.58 am

@Chris – All is going well, we’re on track to launch RTI compliant UK payroll before 1st April. We’ll release more information early next year once we’re closer to launch.

December 23, 2014 at 4.02 am

This is absolutely essential and I am delighted to see that it is on the way!

Megan Caywood
December 24, 2014 at 10.52 am

Great to hear! We’re excited to release it. Thanks for the comment, Olly.

Paul Hayter
January 19, 2015 at 2.49 am

Any update on release

Oliver Furniss
January 19, 2015 at 7.30 am

@Paul, we’ll be announcing full details in a couple of weeks at Xerocon London. We’re planning to allow everyone to have enough time to get setup and ready before the new financial year.

Megan Caywood
January 29, 2015 at 8.27 am

Hi All,

Wanted to give you an update since it is now early in the year: we are planning to give share full details of UK Payroll at Xerocon on 10 & 11 February. After this we will be sharing more information on what’s coming in mid February. Can’t wait for you to see it!

Sean Clark
February 11, 2015 at 5.14 am

Any news on the CIS side of things ? It would be great if Xero could deal with sub-contractors CIS deductions in Payroll and decuctons the business sufferes on payments from main contractors In Sales ?

Oliver Furniss
February 11, 2015 at 6.50 am

In regards to CIS support: In the Employer Payment Submission (EPS) you will be able to report the amount of CIS deductions suffered, however that will be the extent of CIS support at launch.

February 17, 2015 at 12.47 am

Any chance of seeing some screen shots of pay input screen, addns/dedns screen and maybe some payroll output reports?

March 4, 2015 at 9.02 am

I’m interested in finding out the cost for adding 1 person extra on each subscription level for payroll ie 3 on standard or 11 on premium or are we fixed to pay high rates for one additional person

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