In this section:

Correcting payroll 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 the current tax year or a previous one. It also tells you where to go for guidance on correcting mistakes in your Employer Annual Return.

On this page:

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

Deductions errors in the current tax year - amending form P11

If you've made a mistake in the current tax year when updating an employee's form P11 or equivalent payroll record, there are a number of steps you must take. You should try to correct any mistake in the week or month that you discover it.

If you use commercial payroll software

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

Making amendments using the P11 Calculator

If you use the P11 Calculator within HM Revenue & Customs (HMRC's) Basic PAYE Tools package, 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'

Where to get HMRC's free P11 Calculator

A set of Basic PAYE Tools are now available to download straight to your computer. In addition to the P11 Calculator, the tools include:

an employer database on which you can record your employees' details
a range of other calculators that work out, for example, statutory payments
interactive forms such as P11D working sheets
a Learning Zone - including interactive material on how to use the Basic PAYE Tools

Download Basic PAYE Tools (Opens new window) from the Business Link website

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

More about completing a paper form P11

More about using the HMRC's P11 Calculator

Top

Incorrect PAYE tax and NICs deductions in a previous tax year

PAYE

If you discover that you deducted the wrong amount of PAYE tax from an employee in a previous tax year, follow the link below to find out what to do and how to contact HMRC about it.

Incorrect PAYE in previous years

NICs

If you discover that you deducted the wrong amount of NICs from an employee in a previous tax year, you should contact HMRC's Employer Helpline for advice about how to proceed.

Find contact details for HMRC's Employer Helpline

Top

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 HMRC's Employer Helpline. In general it is up to you to bear the cost of your mistake, but if it was made in good faith, HMRC 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, HMRC 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.