PAYE at the end of the tax year

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Correcting PAYE errors

Correcting PAYE errors

This guide sets out the procedures you need to follow if you discover you made make a mistake when calculating, reporting and deducting PAYE tax and NICs from your employees. It covers the steps to take if you deducted or entered the wrong amount during a previous tax year or the current tax year. It also tells you how to correct mistakes in your end of year returns.

On this page:

Incorrect PAYE tax and NICs deductions in a previous tax year
Deductions errors in the current tax year - amending form P11
How to rectify underpayments or overpayments of PAYE tax or NICs
Correcting errors in your Employer Annual Return

Incorrect PAYE tax and NICs deductions in a previous tax year

If you discover that you deducted the wrong amount of PAYE tax or NICs from an employee in a previous tax year, you should contact us for advice about how to proceed. Call our Employer Helpline on Tel 08457 143 143 open from 8:00am to 8:00pm Monday to Friday and 8:00 to 5:00pm Saturday and Sunday.

Deductions errors in the current tax year - amending form P11

If you've made a mistake in the current tax year, there are a number of steps you must take but you should try to correct any mistake in the week or month that you discover it.

Amending a paper form P11

If you have recorded the payment wrongly:

draw a line through the incorrect entry or entries (making sure the originals can still be read)
insert the correct amount or amounts alongside the deleted entries

If you have made a mistake in how much you paid do both of the following:

mark the figure to show there has been a mistake but do not change the original figure (eg mark with an asterisk and add a footnote)
adjust the amounts of PAYE tax and NIC due at the next payday to take account of the earlier underpayment or overpayment

Making amendments using the P11 Calculator

If you use the P11 Calculator on the Employer CD-Rom proceed as follows:

select the employee to whom the mistake relates from the main P11 Calculator menu
view the P11 Summary and take a print-out
go back to the P11 Calculator menu
select 'Amend a Previous Pay Period for this Employee'
delete all of the pay periods back to the one containing the error
if necessary, go to the Employer Database and change the NI category letter or tax code for the employee
re-enter the correct gross pay details for all of the pay periods you deleted

If you've been using a P32 Summary in conjunction with the P11 Calculator you will also need to correct this. The steps you'll need to take are:

enter the P11 Calculator as normal
select an employer name if there is more than one
select P32 Summary
view the P32 Summary and take a print-out
go back to the P32 main menu
select 'Refresh P32 Summary'

More about completing a paper form P11

More about using the Employer CD-Rom P11 Calculator

If you use commercial payroll software

You should consult the software program's instructions for details of how to amend an employee's form P11.

How to rectify incorrect deductions of PAYE tax or NICs

If you have deducted too much PAYE tax or NICs from your employee, simply refund the extra amount on their next payday.

If you have deducted too little, contact our Employer Helpline on Tel 08457 143 143. In general it is up to you to bear the cost of your mistake, but if it was made in good faith we may permit you to transfer the cost to the employee:

for NICs underpayments, this would be through extra deductions from your subsequent payments to the employee (with a time limit of the end of the tax year following the tax year in which the error was made)
for PAYE tax, we may direct the employee to pay the amount of the under-deduction

Making an error in good faith means that you honestly intended to assess the correct deductions. An example is inadvertently using an out-of-date rate or threshold in your calculations.

Correcting errors on your Employer Annual Return

If you discover that you have made a mistake in completing your Employer Annual Return, you will need to submit an amended return (preferably online). If the mistake is on a form P14, you must also send us an amended form P35.

In either case, the form should contain only the amended information - whether this is a positive or negative amount. Do not send us a new form containing the revised totals.

For example, if your original P14 for an employee incorrectly shows a PAYE tax deduction of £100.13 instead of the actual figure of £10.13, you should send us another P14 for the employee. But this second form shouldn't record the correct figure of £10.13. Instead it should tell us the difference between the original amount and the actual figure. So in this example the revised P14 should show -£90.00.