HMRC RTI for care home payroll: common mistakes and how to avoid them

What Is HMRC RTI?

Real Time Information (RTI) is the HMRC payroll reporting framework under which employers must submit payroll data to HMRC on or before the date employees are paid, not monthly in arrears.

For care homes, RTI compliance sits within the broader HR and payroll function. Failures carry more than financial penalties. Late or incorrect submissions can affect employees' tax codes, National Insurance records, and benefit entitlements.

The Core RTI Submissions

The FPS is the most operationally significant. It must be submitted on or before payday for every payroll run.

Common RTI Mistakes in Care Home Payroll

1. Late FPS submissions

The FPS must be submitted on or before the date employees are paid. A submission date after the pay date is a late filing. HMRC's late filing penalty regime applies after the first month of the tax year in which a late filing occurs.

Why this happens in care homes: Rota-based payroll with variable hours means the final hours data often arrives late, and the payroll run gets pushed. The FPS is then submitted after payday.

Fix: Build the payroll cutoff into the rota cycle, not at the end of it.

2. Incorrect employee data

HMRC RTI matches submissions to their records using three identifiers: National Insurance number, date of birth, and name. Where these do not match, the record is unmatched and the employee's NI contributions may not be credited correctly.

Common errors:

• Names not matching HMRC records (middle names, hyphenated names, legal name vs known name)
• NI number not verified at employment start
• Date of birth errors

Fix: Verify NI number, date of birth, and name at onboarding, not during the first FPS.

3. Missing new starter declarations

Every new employee must complete a starter declaration (formerly P46) before their first payroll run. The starter declaration determines the initial tax code applied.

Without it, the employee defaults to a BR (basic rate, no personal allowance) tax code, which means they will pay more tax than they should until a correct tax code is issued. They will then expect a rebate that the employer is not responsible for administering.

Fix: Include the starter declaration in your onboarding pack.

4. Not submitting EPS for months with no payment

If you have no employees to pay in a given period (unusual but possible), or have made corrections that reduce your HMRC liability to zero, you must still submit an EPS. Not submitting can result in HMRC issuing estimated demands.

5. Incorrect pay reference period

FPS submissions must reflect the correct pay period. Submitting an FPS for the wrong period creates reconciliation problems and may flag as a duplicate or gap.

Care Home-Specific RTI Complications

Variable hours and rota staff

Care home payroll is complicated by rota-based working, overtime, on-call, and regular shift changes. Variable pay means the payroll calculation process is more complex and more error-prone than a fixed-salary payroll.

Agency workers

Agency staff are not on your payroll. They are on the agency's payroll. You pay the agency, not the worker. You do not include agency staff in your RTI submissions. The agency handles their PAYE and RTI obligations.

However, if you employ someone directly who previously came through an agency, you must treat them as a new starter and process them through your payroll from their first day of direct employment.

Statutory payments

Statutory Sick Pay (SSP), Statutory Maternity Pay (SMP), Paternity, Adoption and Shared Parental Pay all have specific RTI recording requirements. SSP in particular is common in care settings due to the physical demands of the role.

SMP recovery is claimed through the EPS. Your payroll software should handle this, but the EPS must be submitted to recover the money.

Penalties for RTI Non-Compliance

These penalties accumulate monthly. A care home with 50 employees paying three months of late penalties before the issue is identified would incur £900 in fixed penalties, in addition to any late payment interest on underpaid PAYE.

HMRC also applies a 5% surcharge on amounts unpaid after 30 days, increasing to 10% after 6 months.

Integrating RTI with Your Care Home Operations

RTI is a downstream consequence of getting the upstream payroll data right: hours, pay rates, leave, starter and leaver events. When these are managed in disconnected systems (rota in one place, payroll in another, leave in a spreadsheet), RTI errors are the predictable result.

A connected HR operations system processes payroll, leave, and RTI from the same data source, reducing the reconciliation step that creates most RTI errors in care home settings.

For pricing context on managing HR operations for a care home team, see the Statixs pricing page.

See how HMRC RTI and payroll operations work in Statixs