You must make sure the payroll figures and details about your employees that you report to HM Revenue & Customs (HMRC) using Full Payment Submissions (FPS) are accurate. Sometimes though, mistakes will happen - and if they do, it's very important that you correct them.
This guide shows you what you need to do if you find out you have made a mistake with employees' personal details and how to handle errors you may have made when calculating, reporting and deducting PAYE tax and National Insurance contributions (NICs) from employees.
On this page:
If you have made a mistake on an FPS related to an employee's personal details (for example, you have used the wrong date of birth or surname) you must correct the error on your next FPS.
If an employee's personal details have changed (for example, their address or surname) you should advise them to contact HMRC to report the change.
Employees can update their details online - or find out how to do it in writing - by using the link below.
Change of name or address - how to report it to HMRC
You need to enter the employee's new details on your payroll records so they are reported to HMRC in your next FPS. If you enter the new details on the FPS but your employee doesn't report the changes to HMRC, then the new details will not be updated on your employee's record held by HMRC.
If you have incorrectly reported the date an employee first started working for you, or you did not include the start date when you reported their first payment on an FPS, you should update your payroll records to reflect the correct start date. You must not, however, report the corrected or known start date on your next FPS to HMRC as this will result in a duplication of the employee's record on HMRC's systems and the possible issue of an incorrect code number.
If you have incorrectly reported the leaving date of an employee you should update your payroll records to reflect the correct leaving date. You must not, however, report the corrected leaving date on your next FPS to HMRC as this will result in a duplication of the employee's record on HMRC's systems.
If you have taken an employee off your payroll in error (for example, an employee changes their mind and decides to continue working for you) and you have already notified HMRC of their leaving date on an FPS, you should continue making payments using the same payroll ID and submit an FPS but do not enter a new start date.
You cannot use this method if you have given the employee a P45, in this case you will need to make the employee a new starter and give them a different payroll ID.
If you have deducted too much NICs from your employee, simply refund the extra amount on their next payday.
If your employee paid too little NICs you must pay the underpaid NICs to HMRC as soon as you know you have paid too little.
Sometimes you can recover the amounts the employee has underpaid if you have made an error in good faith, but there are strict rules about when you can do this. You must contact HMRC's Employer Helpline before you recover any from your employee.
If you are able to recover from your employee you need to make sure that both the following apply:
There's more information later in this guide about how to report this on your payroll.
Find contact details for HMRC's Employer Helpline
You must send an FPS every time you pay your employees to let HMRC know who has been paid, how much they have been paid and the deductions made for PAYE tax and NICs. If you have made a mistake in the current tax year or you discover that information you have already reported is incorrect, the action you need to take depends on when you discover the error.
If you need to correct an error in a previous tax year, you can find out how to do it by following the link below.
Correcting payroll errors in a previous tax year
You can either:
If the correction necessitates an additional payment to the employee outside of the regular payroll cycle you must submit an additional FPS on or before the date of the additional payment.
If you use the second method, and submit an additional FPS to correct an under reported amount of pay or deductions:
If you submit an additional FPS, your payroll software should work out the correct values that you will be reporting. But it's useful for you to understand what you'll be reporting and why. The following examples should help.
Example 1: under reported amount of pay - you discover before sending your FPS for month six that an employee was underreported pay of £100 in month five
You can either:
If you want to submit an additional FPS for month five, and the original FPS for month five shows:
Data field |
Amount |
|---|---|
taxable pay to date |
£7,000 |
tax to date |
£1,400 |
taxable pay this payment |
£1,200 |
tax on payment |
£240 |
employer's NICs to date |
£535 |
employees' NICs to date |
£456 |
pay subject to Class 1 NICs this payment |
£1,200 |
employer's NICs this payment |
£79 |
employees' NICs this payment |
£68 |
pay after statutory deductions |
£892 (£1,200 pay, less £240 tax and £68 NICs) |
payment date |
30 August |
The additional FPS for month five you submit before the FPS for month six, should show:
Data field |
Amount (rounded to read easier) |
|---|---|
taxable pay to date |
£7,100 (ie adding the under-declared amount) |
tax to date |
£1,420 (ie adding the tax due on the under-declared amount) |
taxable pay this payment |
£100 (ie the amount underreported in the previous FPS) |
tax on payment |
£20 (ie the tax paid on the underreported amount) |
employer's NICs to date |
£549 (ie employer's NICs to date, including NICs on the underreported amount) |
employees' NICs to date |
£468 (ie employees NICs to date, including NICs on the underreported amount) |
pay subject to Class 1 NICs this payment |
£100 (ie the underreported amount) |
employer's NICs this payment |
£14 (ie the employer's NICs due on the underreported amount) |
employees' NICs this payment |
£12 (ie the employees NICs due on the underreported amount) |
pay after statutory deductions |
£68 (ie underreported pay of £100 less the £20 tax and £12 NICs due on the underreported amount) |
payment date |
30 August |
Example 2: over reported amount of pay - you discover before sending the FPS for month six that an employee was over reported pay of £100 in month five.
You can either:
It's usually easier for you to correct the error by making sure you report the correct year to date figures on your next regular FPS.
But if you want to submit an additional FPS for month five, you can. For example, if your original FPS for month five shows:
Data field |
Amount |
|---|---|
taxable pay to date |
£7,000 |
tax to date |
£1,400 |
taxable pay this payment |
£1,200 |
tax on payment |
£240 |
employer's NICs to date |
£535 |
employees' NICs to date |
£456 |
pay subject to Class 1 NICs this payment |
£1,200 |
employer's NICs this payment |
£79 |
employees' NICs this payment |
£68 |
pay after statutory deductions |
£892 (£1,200 pay, less £240 tax and £68 NICs) |
payment date |
30 August |
The additional FPS for month five you submit before the FPS for month six should show:
Data field |
Amount |
|---|---|
taxable pay to date |
£6,900 (pay to date less the previous amount declared overpayment) |
tax to date |
£1,380 (adjusted to reduce the tax as a result of the overpayment) |
taxable pay this payment |
£0 |
tax on payment |
£0 |
employer's NICs to date |
£521 |
employees' NICs to date |
£444 |
pay subject to Class 1 NICs this payment |
£0 |
employer's NICs this payment |
£0 |
employees' NICs this payment |
£0 |
pay after statutory deductions |
leave blank |
payment date |
30 August |
If the over or under reporting means you have paid the wrong amount to HMRC, you should adjust the amounts of PAYE tax and NICs due for the next tax month or quarter to correct the earlier mistake.
If you discover an error after you've submitted a later FPS, but still in the same tax year - for example you notice an error made in month three during month seven - you must amend the error by adjusting your next payroll. However if the error necessitates an additional payment to the employee outside of the regular payroll cycle, then you must submit an additional FPS on or before the additional payment is made. For example, if you find out before sending the FPS for month seven that an employee was under or over reported pay of £100 in month three, you must adjust the month seven 'year to date' figures to reflect the correct year to date position.
If the error relates to an employee who has left your business, you must include the employee on the next available FPS, showing updated year to date figures reflecting the correct year to date position at their date of leaving. The original leaving date must be shown again on the FPS and the payment date must be the same as, or later than, the original payment date shown on the employee's last FPS.
You can enter up to four National Insurance category letters for one employee on an FPS. In most cases, the category letter you use at the start of the year will be the same for the whole year.
If you discover that the wrong National Insurance category letter was used for an employee on an FPS you have submitted, you should on your next FPS:
If you have repaid or recovered NICs from your employee because of an incorrect category letter you can record the amount in the 'employee’s NICs this payment' data field for the incorrect category letter.
If you do not or are unable to recover all of the NICs underpaid from the first FPS made after you discover the error and instead recover any from subsequent FPS you should continue to show the amount recovered from the earnings shown on the FPS, as above.
An FPS was submitted for months one to six which showed the National Insurance category letter A.
Year to date NICs data in month six shows |
Amount |
|---|---|
Earnings at the LEL to date |
£2,784 |
Earnings at the LEL to the PT to date |
£1,020 |
Earnings from the PT to the UAP to date |
£2,400 |
Earnings from the UAP to the Upper Earnings Limit (UEL) to date |
£0 |
Pay subject to Class 1 NICs this payment |
£1,034 |
Employer's NICs to date |
£339 |
Employees' NICs to date |
£288 |
The National Insurance category letter should have been C. When you send your FPS for month seven which will include the NICs due on any earnings paid in that month, it should show:
Category |
A |
|---|---|
Earnings at the LEL to date |
£0 |
Earnings at the LEL to the PT to date |
£0 |
Earnings from the PT to the UAP to date |
£0 |
Earnings from the UAP to the UEL to date |
£0 |
Employer's NICs to date |
£0 |
Employees' NICs to date |
£0 |
Pay subject to Class 1 NICs this payment |
£0 |
Employer's NICs this payment |
£0 |
Employees' NICs this payment |
-£288 (overpayment of employee's NICs to be repaid may be recorded here) |
Category |
C |
|---|---|
Earnings at the LEL to date |
£3,248 |
Earnings at the LEL to the PT to date |
£1,190 |
Earnings from the PT to the UAP to date |
£2,800 |
Earnings from the UAP to the upper earnings limit to date |
£0 |
Pay subject to Class 1 NICs this payment |
£1,034 |
Employer's NICs to date |
£396 |
Employees' NICs to date |
£0 |
Employer's NICs this payment |
£57 |
Employees' NICs this payment |
£0 |
If you have made a mistake on an EPS in the current tax year, you should submit another EPS to show the correct total year to date figures.
You must always show correct total year to date figures on the EPS. You should not show the difference between what was originally submitted and what the figure should be. Your first EPS after your started sending PAYE information in real time should have included any recovered payments within the same tax year, even if they were recovered before you started to send PAYE information in real time.
If you need to correct an error in a previous tax year, you can find out how to do so by following the link below.
Correcting payroll errors - previous year
If you have submitted your final FPS (and where appropriate an EPS) for the tax year, but haven't indicated that this is your 'Final submission for the tax year', you must submit an EPS indicating that it is your 'Final submission for the tax year'. You must also complete the end-of year-declarations and questions.
You don't need to send another final FPS - just a final EPS is required.
