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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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.
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'.
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.
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.
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 temporary relaxation of reporting arrangements for small businesses, for a transitional period until April 2014.
This relaxation means that employers with fewer than 50 employees may send information to HMRC by 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 intended to give some extra time for filing to small businesses that pay weekly, fortnightly or more frequently, but who find it difficult to report every payment to employees at the time of payment and 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 expects most employers to be reporting PAYE in real time from their first payday on or after 6 April 2013.
HMRC recommends that employers and agents move to real time reporting as soon as possible in order to give them time to adapt their business processes before automated penalties are implemented from April 2014.
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.
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 can send as many FPS as you need to - and you don't have to pay all your employees on the same date, as long as you pay them all in the same, single tax month.
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. For example, if all your employees are paid annually in December (month 9) every year and you want to change the annual payday for all your employees to:
Your expected month will be changed to March (month 12) 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.
If your PAYE scheme closes during the tax year, you must: