Stage 1 — Get oriented

RTI

What is RTI?

RTI (Real Time Information) is the HMRC payroll reporting regime introduced in April 2013. Under RTI, UK employers must submit a Full Payment Submission (FPS) to HMRC on or before every payday — not at year-end, not monthly in arrears, but in real time, every time you run payroll.

The FPS tells HMRC:

  • How much each employee was paid
  • What tax (PAYE) and National Insurance was deducted
  • Whether there were any changes (new starters, leavers, address changes)

HMRC uses RTI data to calculate employees’ tax liabilities in real time, which enables things like Universal Credit calculations and underpayment notifications without waiting for year-end.

Why RTI matters for HR software buyers

This is the single most important question for UK HR software buyers: does the tool you’re evaluating file RTI?

If the answer is no, you cannot use that tool as your UK payroll provider. You must either:

  1. Use a separate HMRC-recognised payroll tool alongside your HRIS (e.g., Sage Payroll or Xero Payroll paired with Breathe HR)
  2. Switch to an HRIS that includes HMRC-recognised payroll (HiBob, Sage HR, Employment Hero)

This is not optional. RTI filing is a legal obligation for every UK employer. Failure to file on time results in automatic HMRC penalties — £100/month for small employers, scaling up with headcount.

The Breathe HR problem

The most well-documented example of this issue in the UK SME market: Breathe HR, the largest UK SME HRIS brand by marketing presence, does not file HMRC RTI.

Breathe is a leave tracker and HR records system. It is genuinely good at what it does. But it is not payroll software. It does not appear on the HMRC-recognised software list. If you run payroll through Breathe, you are not filing RTI — and you’re accumulating HMRC penalties without knowing it.

The correct setup if you want to use Breathe:

  • Breathe HR for leave management, onboarding, and HR records
  • Sage Payroll or Xero Payroll (both HMRC-recognised) for RTI submission

This is a legitimate setup. The problem is that many Breathe buyers don’t realise they need the second tool until after they’ve signed.

HMRC-recognised payroll software: the short list

The full list is at GOV.UK. The tools most commonly reviewed on this site that are on the HMRC-recognised list:

  • Sage HR + Payroll
  • HiBob (UK payroll module)
  • Employment Hero (UK)
  • Rippling (UK payroll module)
  • IRIS Payroll
  • Moorepay

Tools that are not on the HMRC-recognised list:

  • Breathe HR (HRIS only)
  • BambooHR (US product; UK payroll not supported)
  • Workday (in its standard mid-market configurations; enterprise deployments may differ)

Always verify on the live GOV.UK list — it changes as vendors gain and lose recognition.

RTI penalties

HMRC issues automatic late-filing penalties under RTI:

Employer sizeMonthly penalty for late FPS
1–9 employees£100/month
10–49 employees£200/month
50–249 employees£300/month
250+ employees£400/month

These compound. A 3-month delay at a 50-person company costs £900 in penalties before HMRC notices and investigates further.

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