Almost all employers must report payroll information online to HM Revenue & Customs (HMRC) when or before any employee is paid. This information includes details of employees themselves and their pay and deductions.
In addition, you may have to report certain summary information about statutory payments recovered and other deductions each pay period, and if you don't pay anyone in a pay period. You must also report end of year information at the end of the tax year, and certain information if your PAYE scheme closes.
You'll have to report when you provide an employee with a car, or replace or withdraw one. You may also have to report expenses and benefits.
This guide explains when you have to report payday information, and tells you where you can find out what information you need to include. It also tells you about the other summaries and reports you need to submit.
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To ensure that the information held by HMRC matches your payroll information, you can send a payroll alignment submission before or when you first report your payroll information online. This brings HMRC records into alignment with your own information about who your employees are, their year-to-date figures and so on.
In most instances, you will be asked to complete payroll alignment using the information you provide the first time you send a Full Payment Submission (FPS).
However if you have 250 or more employees or your PAYE scheme is administered on two or more payroll systems and/or operated by different payroll providers, you must send an Employer Alignment Submission (EAS).
First report - checking your payroll records match with HMRC's
Each time you pay an employee you must send an FPS to advise HMRC how much you've paid them and what deductions, if any, you've made for PAYE tax and National Insurance contributions (NICs). This applies whether the payment is part of your normal pay cycle, or an additional payment made between paydays - such as a bonus, or if you've had to recover a payment from the employee. In almost all cases you must send this information when or before the payment is made. See the section 'Exceptions to reporting PAYE information 'on or before' paying an employee' for the rare occasions when you might not have to do this.
If you pay your employees weekly, you must send a weekly FPS, or if you pay monthly, a monthly FPS. If you have some weekly and some monthly paid employees, you'll have to send an FPS both weekly and monthly. If you pay your employees more than once in a week or month, you must send an FPS on each occasion. Each FPS only needs to contain information about the employees you are actually paying.
When you need to send an FPS, you can split the information into batches if that is easier. For example, you can send one FPS for employees and another for directors.
If you haven't paid anyone at all in a tax month, then you must send an Employer Payment Summary (EPS) instead of an FPS. See the guide 'What payroll information to report' - there's a link at the end of this section.
You can send your FPS to HMRC in advance, so if for example payroll staff are going on holiday for two weeks, they can make three separate weekly submissions immediately, one after the other, before they leave.
If you pay an employee an additional amount between standard paydays you need to send another FPS on or before you make that payment. The same applies if you recover an amount from an employee, for example to correct an overpayment.
But if you need to correct an error see the guide 'Correcting payroll reporting errors - current year'.
Correcting payroll errors - current year
Extra payments on a day other than the usual payday
If something happens that will alter information already reported to HMRC relating to a payment that hasn't yet been made, you might have to send another FPS to correct this information. For example, if you submit an FPS before the actual payday, and then make an extra payment (such as a bonus) before that payday, you'll have to submit an FPS for the extra payment.
What payroll information to report
On occasions you may find you are unable to report your payroll information each time you pay an employee and HMRC has provided a table to show the situations where an FPS does not have to be submitted on or before a payment is made to an employee, and what employers must do instead.
In all other cases payments must be reported on or before the time the payment to the employee is made.
HMRC recognises that some small employers who pay employees weekly, fortnightly or more frequently, but only process their payroll monthly may need longer to adapt to reporting PAYE information in real time. HMRC has therefore agreed a relaxation of reporting arrangements for small businesses, for a short transitional period.
Until 5 October 2013, employers with fewer than 50 employees, who find it difficult to report every payment to employees at the time of payment, may send information to HMRC by the date of their regular payroll run but no later than the end of the tax month in which the payments are made (a tax month always ends on the 5th of a calendar month).
This is a temporary relaxation to give some extra time to small businesses that pay weekly, fortnightly or more frequently, but who only run their payroll (or use an agent to run their payroll) at the end of the month. This extra time will enable these businesses to adapt their processes or change their arrangements with their payroll service supplier so that they can comply with the new legislation.
From April 2013, employers who choose to take advantage of this relaxation will still need to report their PAYE in real time by the last payday in the month or at the end of the tax month at the latest (a tax month always ends on the 5th of a calendar month).
This is not a withdrawal of the requirement to report PAYE in real time. All employers are still required to operate PAYE in real time and HMRC expect most employers to be reporting PAYE in real time from their first payday on or after 6 April.
From 6 October 2013, normal rules will apply - so all employers will be required to report PAYE in real time each time they pay their employees.
HMRC recommends that employers and agents move to real time reporting as soon as possible in order to give them time to refine business processes before automated penalties are implemented.
Employers using commercial payroll software will find that their payroll software is designed to submit their PAYE information as part of their integrated payroll processes. So these employers should continue to or start to report 'on or before' each payment is made to employees as this will be the easiest and quickest way of operating their payroll.
HMRC has provided an example of how to complete an FPS where these transitional arrangements apply.
The amount you can recover for statutory payments such as Statutory Sick Pay depends on aggregate levels of sickness, total NICs paid over, whether you qualify for 'small employer's relief' and other factors that are looked at from an employer or PAYE scheme perspective.
The FPS only contains information about specific employees, so you need to send an EPS to show:
Once you've sent an EPS to HMRC, they can then offset the amounts you want to recover against the payments you're due to make. So if you want the deduction to apply to a specific month, you'll need to send the EPS before your payment to HMRC is due on the 19th of the following month. For example, if you wish to inform HMRC that you are reducing the June tax month (6 June to 5 July) liability the EPS showing these details must be received by HMRC before 19 July. If HMRC does not receive the EPS until 20 July they will apply the reduction to the July tax month.
The EPS must show the consolidated position, inclusive of all recoveries and CIS deductions suffered, for the entire PAYE scheme. Even if you operate separate payrolls on the same PAYE scheme, for example a weekly payroll and a monthly payroll, you must send one EPS to cover the whole PAYE scheme. Failure to provide a consolidated position could result in apparent underpayments as HMRC will only accept the latest year to date information.
Note: If you have recovered any statutory payments, CIS deductions suffered or NICs holiday in the same tax year prior to sending PAYE information in real time you must report the year to date figures for any recovered payments on an EPS and this first EPS must be sent when you've sent your first FPS or by the 19th of the following month.
When you send your final payroll report for the tax year on or before 5 April, whether it is an FPS or an EPS, you must ensure that you complete the end of year questions and declarations, as detailed in the guide 'What payroll information you need to report'. If you send in separate FPS, for example for weekly and monthly employees, then include the end of year information in whichever is the last FPS or EPS for the year, regardless of which payroll or employees it relates to.
If you pay all your employees annually in a single tax month, you can ask HMRC to treat your PAYE scheme as an 'annual scheme'. And you will make your payments to HMRC annually too.
You must advise HMRC which month you plan to pay all your employees because when an annual scheme is registered they will record which month your FPS is expected to be made. For example, if all your employees are paid in March every year, HMRC will expect an FPS in March - and if this is your only submission for the tax year you must indicate that it is your 'Final submission for the tax year' and answer the end of year declarations and questions. If, in a later tax year, you submit your FPS in a different month, your expected month will be changed by HMRC for future years. Once your business is registered as an annual scheme, you do not need to send in EPS for the other 11 months of the tax year that you make no payments to employees.
If you satisfy the requirements and think that an annual scheme might apply to you, contact HMRC's Payment enquiry helpline and have your Accounts Office reference number to hand.
Once your PAYE scheme is accepted as an annual one, if you send more than one FPS in the tax year HMRC will automatically cancel the annual payer status for that year and all following years - and they will expect you to send all subsequent FPS and payments at least on a monthly basis.
If you pay employees less frequently than each month, for example quarterly or six-monthly (or you do not register as an annual scheme as above), you must submit an EPS for all the months that you make no payments to employees, by completing the 'No payment dates' or 'Period of inactivity' fields to show the tax months that you won't be sending an FPS. For example, if you pay all your employees quarterly in tax months 3, 6, 9 and 12, HMRC will expect an FPS for these months; but you must also submit EPS to cover tax months 1, 2, 4, 5, 7, 8, 10 and 11 when no payments are made to employees.
Find contact details for HMRC's Payment enquiry helpline
PAYE/National Insurance payments and deadlines
What payroll information to report
Almost all employers must report payroll information to HMRC on or before the time the payment is made. HMRC does not recommend that you submit FPS due in a tax year too far in advance of payment, because if the FPS is sent closer to the time of payment you'll be able to include any late amendments you have to report.
Whilst FPS can be submitted in advance for the current tax year - for example, an employer paying weekly could submit the FPS in advance each month, or a director/sole employee planning to take the same earnings each month could submit 12 FPS for the full year in April - those sent several months in advance are more likely to need correcting because an employee may leave, receive additional payments or you might receive a new tax code for them that changes the tax due.
For example: If you submit six monthly FPS for tax months 1, 2, 3, 4, 5 and 6 in advance and then an employee leaves in tax month 3, you'll have to submit another FPS for month 3 to show the employee has left, with revised year to dates figures, and you'll also have to submit further FPS for months 4, 5 and 6, to replace the original FPS submitted, to show that:
If your PAYE scheme closes during the tax year, you must:
What payroll information to report
PAYE If your business closes or changes
You may also need to send other reports at the end of the tax year if you provide expenses or benefits - see the link below.
Completing forms P9D, P11D and P11D(b)
You must submit a P46 (Car) when you first provide an employee with a car which is available for private use, and again when you either provide them with an additional car or withdraw their car without replacing it.
