HMRC did not introduce a new requirement from April 2026 for employers to report the exact number of hours worked by every employee through Real Time Information payroll submissions. That proposal was considered, delayed and then withdrawn before it came into force. Employers must still report payroll information accurately through RTI, and they must still keep reliable working time records for National Minimum Wage, holiday pay, statutory pay and employment law purposes. However, the broad RTI “normal hours worked” categories remain in place rather than being replaced by exact-hours reporting.

This is an important distinction. Payroll compliance in 2026 has not become simpler overall. Employers still need accurate records, correct start dates for new employments, careful leaver processes, updated National Minimum Wage checks and payroll software that can handle current RTI requirements. The practical focus is not “report every exact hour to HMRC on the FPS”. It is making sure the information you do submit is correct and that your underlying records can support your payroll, tax, National Minimum Wage and employment obligations.

What Employers Must Report Through RTI In 2026

Real Time Information has been the basis of HMRC payroll reporting since 2013. Employers submit a Full Payment Submission each time they pay employees, reporting pay, tax deducted, National Insurance, student loan deductions, employee details and other required payroll data.

The previously proposed move to detailed hours reporting would have required employers to report more precise working hours information for each employee. HMRC confirmed that the draft regulations intended to introduce those additional hours reporting requirements would not be progressed. The current requirement to report normal hours worked continues.

The normal hours field still uses broad bands rather than exact time records.

Current RTI Hours Category	Hours Range
A	Up to 15.99 hours per week
B	16 to 23.99 hours per week
C	24 to 29.99 hours per week
D	30 or more hours per week
E	Other

This means an employee working 37.5 hours a week and an employee working 45 hours a week may still sit in the same broad category. Employers should not treat this as permission to ignore actual working time. You still need accurate records behind the scenes, especially where workers are paid hourly, work irregular shifts, receive overtime, or are close to the National Minimum Wage threshold.

Why Accurate Hours Still Matter

Even without exact-hours RTI reporting, hours data remains central to payroll compliance. HMRC can still review National Minimum Wage records, payslips, contracts, timesheets, holiday pay calculations and other evidence if it opens an enquiry.

The 2026 National Minimum Wage rates increased from 1 April 2026. The National Living Wage for workers aged 21 and over is £12.71 per hour. The 18 to 20 rate is £10.85, and the under-18 and apprentice rates are £8.00.

Our post on the minimum living wage from April 2025 explains the earlier rates, but employers should make sure they are using the current 2026 figures for all payroll runs from April 2026 onward.

For hourly paid staff, the connection is obvious. If the hours worked are wrong, the effective hourly rate calculation may also be wrong. For salaried employees, the issue can be less visible. A worker paid an annual salary can still fall below the minimum wage if they regularly work more hours than the salary supports. This is particularly important in hospitality, care, retail, construction, cleaning, security and other sectors where working patterns may vary.

Accurate hours also matter for holiday pay. The rules for irregular-hours and part-year workers require careful treatment, and employers should not assume that a simple percentage or shortcut will always produce the right result. Our post on understanding the calculation of holiday pay is closely connected to this topic because accurate working time records are often the foundation of a correct holiday pay calculation.

What Has Changed Around Start Dates And Payroll IDs

HMRC’s April 2026 Employer Bulletin highlighted a different RTI issue: employers creating duplicate or incorrect employment records because payroll IDs and start dates are being completed incorrectly. HMRC reminded employers that a genuine new employment must include a start date, but continuing employments should not have the start date field completed again. Employers should also use the payroll ID change indicator where a payroll ID changes.

This is not a brand-new “exact dates” reporting regime in the same way the original article suggested. It is a practical reminder that incorrect FPS fields can create real problems. If a continuing employee is accidentally treated as a new starter, HMRC systems may create duplicate employment records. If a genuine new starter has no start date, separate employment records may be merged incorrectly.

That can affect tax code operation, year-to-date pay records, HMRC reconciliations and employee queries. Our post on the 1257L tax code explains why tax codes matter and why accurate starter information helps employees avoid unnecessary tax confusion.

A good payroll process should record:

• The employee’s actual first day of employment
• The first pay date
• The correct starter declaration
• Student loan and postgraduate loan status
• Payroll ID
• Contracted hours or expected working pattern
• National Insurance number, where available
• Address and date of birth
• Pension auto-enrolment assessment details

For leavers, you should record the actual final day of employment, final pay date, outstanding holiday pay, deductions, benefits, any taxable termination payment and the date the P45 is issued. The leave date should not be guessed or simply matched to the next payroll date if that is not the real end of employment.

Which Employers Are Most Affected

The businesses most affected are not necessarily those with large payrolls. They are employers with variable workforces, frequent starters and leavers, shift patterns and pay close to the minimum wage.

Employer Type	Level Of Payroll Record Risk	Key Challenge
Salaried workforce on fixed hours	Lower	Keeping starter, leaver and payroll ID data clean
Mixed salaried and hourly workforce	Medium	Separating contracted hours from variable hours
Zero-hours or casual workforce	High	Maintaining accurate time records for each pay period
Hospitality, retail, care and construction	High	Variable shifts, overtime, deductions and NMW risk
Professional services and office-based firms	Low to medium	Part-time, flexible and hybrid arrangements

Our post on hybrid work models gives broader context on how working patterns have changed. Even office-based businesses now need to be careful where staff have flexible hours, compressed hours, part-time arrangements or remote working patterns that affect expenses, pay and working time.

For construction employers, payroll compliance may sit alongside CIS responsibilities. Our post on understanding the importance of CIS registration is relevant if you use subcontractors, and our CIS for contractors: a checklist covers the reporting obligations that sit outside normal employee payroll.

What You Need To Change In Payroll And HR Systems

Even though exact-hours RTI reporting has not come into force, employers should still use 2026 as a prompt to improve payroll and HR processes.

First, review timekeeping. For variable-hours staff, you need a reliable method of recording hours worked, breaks, overtime and absences. This can be through a time and attendance system, HR software, digital timesheets or a manual process with clear approval. The important point is that the data should be accurate, retained and available if challenged.

Second, review payroll software. Your system should be up to date for current tax, National Insurance, student loan, statutory pay, pension and National Minimum Wage rates. It should also handle FPS submissions correctly, including starter and leaver information, payroll ID changes and amendments where required. Our post on the rise of AI and automation in accounting covers how modern systems are improving accuracy and reducing manual payroll risk.

Third, tighten starter and leaver processes. A starter who joins on 14 April should not be recorded as starting on 1 May simply because that is the first payroll date. A leaver’s final employment date should also be clear, particularly for zero-hours workers who stop accepting shifts without formally resigning.

Fourth, reconcile payroll after every run. Check gross pay, tax, National Insurance, pension contributions, statutory payments, student loan deductions and net pay. Payroll should also reconcile to accounting records, which is why a reliable bookkeeping process matters.

Penalties And HMRC Risk

RTI penalties can apply where FPS submissions are late, missing or incomplete. HMRC can issue penalties if your FPS is submitted after the payment date, if you do not send the expected number of FPS submissions, or if you fail to submit an Employer Payment Summary where needed.

The monthly late-filing penalty depends on the size of the PAYE scheme. Small schemes with 1 to 9 employees can face a £100 monthly penalty, rising for larger schemes. While HMRC may not charge penalties in every case, employers should not rely on discretion.

Our post on late tax returns and penalties gives a broader picture of how HMRC penalties can build up. If payroll errors trigger deeper questions, our post on HMRC enquiries and how an accountant supports you explains what professional support looks like.

Payroll errors can also expose wider compliance problems. Incorrect hours records may point to National Minimum Wage underpayment. Incorrect employment status decisions may raise PAYE and National Insurance questions. Weak payroll controls may lead to pension auto-enrolment issues. Our post on national insurance contributions gives context on the employer-side cost and reporting responsibilities that sit alongside wages.

Other 2026 Payroll Changes Employers Should Not Miss

Although exact-hours RTI reporting was withdrawn, 2026 has still brought important payroll changes.

From 6 April 2026, Statutory Sick Pay changed. The lower earnings limit was removed for SSP, and SSP is now paid from the first full day of sickness absence rather than from day 4. The rate is the lower of 80% of normal weekly earnings or the weekly flat rate of £123.25.

Employers should also review parental leave and pay policies. HMRC’s April 2026 Employer Bulletin notes changes to paternity leave, unpaid parental leave and bereaved partner’s paternity leave. Some of these are day-one leave rights, although statutory pay eligibility rules may still require a minimum period of continuous employment.

These changes increase the importance of accurate start dates, absence records and payroll software updates. They also affect cash flow planning, especially for smaller employers. Our post on cash flow forecasting for small businesses is useful if higher wage costs, statutory payments or payroll timing issues are putting pressure on your business.

Our post on regtech making compliance smarter also explains why automated compliance tools are becoming more valuable as payroll, tax and employment requirements become more data-led.

How Asmat And Co Can Help

As experienced payroll specialists serving businesses across Slough, Reading, Berkshire and beyond, Asmat & Co Accountants manage RTI submissions as part of a full payroll service. We make sure your FPS submissions are filed on time, employee details are entered correctly, starters and leavers are processed properly, and payroll records are reconciled with your accounts.

For businesses with variable-hours workforces, we help set up reliable systems for collecting hours data, checking National Minimum Wage compliance and calculating holiday pay correctly. For employers who have salaried staff, we make sure contracted hours, pay, pension and statutory pay records are clean and consistent.

Our small business accountants service and limited company accountants service both include access to payroll support. Our accountants in Reading team also supports clients across Berkshire with payroll, bookkeeping, VAT, accounts and tax.

We produce financial reports that reflect payroll costs clearly, including wages, employer National Insurance, pensions, statutory payments and any payroll adjustments. This gives you a better view of staff costs and profitability.

If you currently manage payroll in-house and are not confident your process is accurate, our post on switching to an online accountant explains how straightforward it can be to hand payroll and compliance over to a professional team. Our post on what an accountant does for an SME gives a realistic picture of the day-to-day support available, and our post on choosing the right accountant covers what to look for when reviewing your current arrangements.

Frequently Asked Questions

Do I Need To Report Exact Hours For Every Employee From April 2026?

No. The proposed requirement to report detailed employee hours through RTI from April 2026 was withdrawn. Employers must continue to report normal hours worked through the existing RTI categories, while keeping accurate working time records for payroll, National Minimum Wage and employment compliance.

Do I Still Need Accurate Timesheets?

Yes. Even though exact hours are not reported on every FPS, accurate working time records remain important. They support National Minimum Wage compliance, holiday pay, overtime, absence records and payroll accuracy.

What Should I Report For Salaried Staff?

For RTI normal hours, use the appropriate broad category based on the employee’s normal working pattern. You should still keep clear records of contracted hours, salary and any regular overtime or changes to working pattern.

What If An Employee Works Different Hours Each Week?

You should keep accurate records of their actual hours for payroll and employment compliance. The FPS normal hours category should reflect the appropriate RTI band, but your internal records should be more detailed where the hours vary.

What Happens If I Put The Wrong Start Date On An FPS?

Incorrect start dates can cause HMRC systems to create, merge or duplicate employment records incorrectly. HMRC’s April 2026 Employer Bulletin reminds employers to enter a start date for genuine new employees and leave the field blank for continuing employments.

Do Payroll ID Changes Matter?

Yes. If payroll IDs change and the correct indicator is not used, HMRC may treat the employee as having a new employment. This can create incorrect year-to-date records and unnecessary HMRC queries.

Does This Affect Auto-Enrolment Pension Assessments?

The withdrawn exact-hours RTI proposal does not directly change pension assessment rules. However, accurate pay, age, employment and payroll records remain essential for auto-enrolment compliance.

We Use A Third-Party Payroll Bureau. Who Is Responsible For The Data?

Your payroll provider should process and submit payroll correctly, but the employer must still provide accurate information. If hours, start dates, leaver dates or pay details are wrong before they reach the bureau, the final FPS may still be wrong.

Get Your Payroll Reporting Right From Every Pay Run

The exact-hours RTI proposal did not come into force, but payroll compliance in 2026 still requires care. Employers need accurate working time records, correct National Minimum Wage checks, clean starter and leaver processes, up-to-date payroll software and timely FPS submissions.

Contact Asmat and Co today to make sure your payroll reporting is accurate, your records are reliable and your business is protected from avoidable compliance risks.