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You paid your employee the wrong amount or made incorrect deductions

You can correct a mistake with an employee’s pay or deductions by updating the year-to-date figures in your next regular Full Payment Submission (FPS).

You can also correct it by sending an additional FPS before your next regular FPS is due. You need to:

  • update the ‘this pay period’ figures with the difference between what you originally reported and the correct figures
  • correct the year-to-date figures
  • put the same payment date as the original FPS
  • put the same pay frequency as the original FPS
  • put ‘H - Correction to earlier submission’ in the ‘Late reporting reason’ field

Correct a pension death benefit or flexibility payment

If you’re a pension administrator who needs to correct a flexibility payment or death benefit payment, you must:

  • select the ‘pension flexibility payment’ or ‘pension death benefit payment’ indicator
  • update the ‘pensions drawdown taxable payment’ or ’pensions drawdown non-taxable payment’ fields (or both) with the difference between what you originally reported and the correct figures

If you underpaid your employee

Pay your employee the amount you underpaid them. On or before the day of this payment, send an additional FPS with:

  • the difference between what you originally reported and the correct amount in the ‘In this pay period’ field
  • updated year-to-date figures
  • ‘H - Correction to earlier submission’ in the ‘Late reporting reason’ field

Correct an employee’s National Insurance deductions

What you need to do depends on when you made the mistake.

If the mistake was in this tax year

Repay or deduct the balance from your employee. Update the year-to-date figures to the corrected amount in your next regular FPS or send an additional FPS.

If you deducted too little, you cannot recover more than the employee’s National Insurance contribution due that month.

Example:

You deducted £100 too little in January. In February, your software calculates an £80 National Insurance deduction, which means you can recover up to £80 towards the underpayment that month (a £160 deduction in total).

Recover the remaining £20 in another month.

If the mistake was in the tax years between 6 April 2020 and 5 April 2024

Send an FPS with the amount you should have deducted.

You’ll need to write to HMRC if both the following apply:

  • the difference is negative because you deducted or reported too much National Insurance
  • you still owe your employee a refund, for example because they’ve left your employment

In the letter you’ll need to include:

  • the reference ‘Overpaid NI contributions’
  • your employee’s name, date of birth and National Insurance number
  • why you overpaid National Insurance contributions
  • which tax years you overpaid in
  • how much National Insurance you overpaid
  • why you are unable to make the payment to the employee

For a claim for one employee, send the letter to:

HM Revenue and Customs
National Insurance Contributions and Employer Office
BX9 1AN

For a claim for more than one employee, send the letter to:

HM Revenue and Customs
National Insurance Contributions and Employer Office
BX9 1BX

If the mistake was in the tax years between 6 April 2018 and 5 April 2020

Send an FPS with the correct year-to-date National Insurance if:

  • your payroll software will let you submit an FPS
  • you can pay any National Insurance refunds you owe

If you cannot use an FPS, send an Earlier Year Update (EYU) with the difference between:

  • the amount of National Insurance you originally deducted
  • the correct amount you should have deducted

If the difference is negative (because you deducted or reported too much National Insurance), you also need to set the ‘NIC refund indicator’ to:

  • ‘Yes’ if you’ve refunded your employee or no refund was due
  • ‘No’ if you still owe your employee a refund (for example because they’ve left your employment)

If there’s an underpayment

If you deducted too little National Insurance, pay HMRC the underpayment straight away. You can then recover the amount from your employee by making deductions from their pay.

You cannot recover more than the amount of National Insurance the employee owes in a month (so the employee pays no more than double their normal contribution). Carry over the difference to later months - you can only make deductions in the tax year when you made the mistake and the year after.

Correct an employee’s student loan repayments

What you need to do depends on when you made the mistake.

If the mistake was in this tax year

Repay or deduct the balance from your employee. Update the year-to-date figures to the corrected amount in your next regular FPS or send an additional FPS.

If you deducted too little, you cannot recover more than the student loan repayment due that month.

Example:

You deducted £50 too little in June. In July, your software calculates a £30 student loan deduction, which means you can recover up to £30 towards the underpayment that month (a £60 deduction in total).

Recover the remaining £20 in another month.

If the mistake was in previous tax years

You do not need to take any action if either of the following apply:

  • you’ve deducted too little
  • you’ve already submitted your final FPS for that year

Your employee should contact the Student Loans Company to find out how it affects them.

If you have deducted too much, and you have not sent your final FPS for that year, you can repay your employee. Send an FPS with the correct ‘student loan repayment year to date’ figure as of 5 April for the previous tax year.

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