It's important that all your payments to HM Revenue & Customs (HMRC) reconcile with what you've reported on your Full Payment Submission (FPS) and Employer Payment Summary (EPS).
If you have underpaid or overpaid HMRC in error in respect of PAYE (including Income Tax, National Insurance contributions (NICs), Student Loan or Construction Industry Scheme deductions), what you need to do depends on the type of error and whether HMRC has already been in touch with you about it.
This guide will tell you what to do in the most common situations where you have made an overpayment or underpayment in error.
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If you want to check your current payment position, you can use the Business Tax Dashboard. The dashboard allows you to see your current:
Using HMRC's Business Tax Dashboard
What you need to do about an underpayment to HMRC depends on whether what you have paid matches what's on your FPS and any EPS.
If the underpayment is because there is an error on your FPS or EPS, it's important that you correct the return. For example, you may discover the underpayment to HMRC because you have underpaid your employee by mistake and you've corrected your payroll after making your returns to HMRC.
You must correct the error on the next FPS or EPS you submit and pay the total amount reported on the next FPS or EPS; this will bring your payments into balance.
Correcting payroll errors - current year
PAYE/Class 1 National Insurance
If the amount you've reported on your FPS or EPS matches the amounts you've deducted from employees and you've underpaid HMRC, you should pay the balance as soon as possible using your Accounts Office reference. For example, you may have paid £230 instead of £320 in error, but your returns are correct and show that you owe £320.
Any outstanding balance at the due date for the reporting period's payment could be liable to penalties and possibly interest.
PAYE/Class 1 National Insurance
What you need to do about an overpayment to HMRC will depend on whether the overpayment matches what you've reported on your FPS or EPS.
If your overpayment has been made because there's an error on your FPS or EPS, it's important that you correct the return. For example, you may have overpaid your employee in error and have corrected the mistake on your own records, but only after you've made your returns to HMRC. You must correct the error on the next FPS or EPS you submit.
Correcting payroll errors - current year
Correcting payroll errors - previous year
If you've made an overpayment in error - for example you've paid HMRC £320 instead of £230 for a reporting period - but the amounts you've reported on your FPS or EPS are correct, it's easier to adjust the payment you make after your next return to bring your account into balance.
If you make payments quarterly or annually, or the amount of the overpayment is significant, you can ask HMRC to refund it to you by contacting the Payment Enquiry Helpline.
If you have paid more than once in error and haven't received a letter from HMRC, you can offset the amount you've overpaid against your next payment.
If you make PAYE payments each quarter or on an annual basis, or the amount is significant, you can ask for a refund. You should call the Payment Enquiry Helpline for more information.
If you have received a letter from HMRC about the overpayment, you should contact the office on the letter.
If you have used the wrong payment reference and haven't received a letter from HMRC, you should contact the Payment Enquiry Helpline for advice. The Payment Enquiry Helpline may, in some circumstances, be able to transfer your payment to the right payment reference.
You can check your current year payment reference online by using the PAYE and Class 1 NIC current year reference checker.
If you have received a letter from HMRC about the payment, you should contact the office that sent you the letter.
