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HMRC internal manual

PAYE Manual

From
HM Revenue & Customs
Updated
, see all updates

Background: real time information (RTI): submission types

This subject is presented as follows

Full Payment Submission (FPS)

The FPS is the main RTI electronic submission which an employer completes and submits to HMRC each time that they pay their employees, regardless of the expected length of employment or amount of pay, to advise HMRC which employees they have paid and to give full details of the payment and the deductions from it.

On joining RTI the first FPS from the employer must include year to date details for all employees who were paid at any point during the tax year including those who have left or have not been paid in the pay period. This will allow HMRC to have a complete picture for each individual at the end of the tax year. If an employer has sent an Employer Alignment Submission (EAS) (PAYE5015), their first FPS must still include all employees. This means employers will be including information for all those employees which are employed currently and any that have left during the current tax year.

Where an employer migrates to RTI part way through a tax year, the employer will not be required to send HMRC forms P14 and P35 for the year of migration.

Data the employer submits about their liabilities in respect of each employee, that is, income tax, employer’s NICs, employee’s NICs and student loan payments, will be used to calculate how much an employer must pay to HMRC after the end of each tax month or tax quarter (if paying quarterly). The date the employer must pay their liabilities to HMRC will not change.

An employer can only submit FPS for the previous tax year (CY-1) until 19 April of the current year (CY). If an employer needs to amend payment details submitted for CY-1 from 20 April onwards, they will submit an Earlier Year Update (EYU) as detailed in the appropriate sub heading below.

Starters

Employers in RTI will no longer need to submit a form P45 (part 3)or P46 to HMRC but they will be required to ask all new employees a series of starter questions, similar to those on the form P46. This will include the same P46 statements A, B and C, and student loan question which will allow the employer to establish the correct tax code to apply, and make student loan deductions if appropriate, they must report all necessary details on the FPS.

Where the employee supplies a P45 (part3) from their previous employer, the new employer should use the tax code and previous pay and tax details from that P45 to calculate the tax to be deducted. The code from the P45 should be included on the FPS, with the answers to the new starter questions, but the pay and tax from the previous employer should not be included on the FPS.

Employers who are filing RTI should no longer send forms P45 (Part 3) or P46 to HMRC; starter details will be included on their FPS instead.

Employers can gather starter details anyway they choose but they must store the information for the current year and the three following tax years as the answers to the questions, determines which tax code they should use.

To help employers gather accurate data, from October 2012, HMRC are introducing a new i-form called the Starter Checklist. The form can be completed both electronically and manually to assist all types of employers and employees.

The form is for employer use only and must not be sent to HMRC.

The information an employer needs to gather to work out a new employee’s tax code is available on GOV.UK.

If an employer submits an FPS which has been completed as a new starter, the creation source on NPS will display RTI and the employment start date will display FPS.

If an FPS is received which has not been completed for an employee as a new starter and HMRC has no record of the employee on NPS, a record will be created. The employment will have an assumed start date of the first day of the pay period the FPS has been received for, the creation source will display RTI and the employment start date source will display RTI Service.

Notes:

  1. The pay period is determined by the payment frequency completed by the employer on the FPS. For example if the employer notified HMRC of a monthly paid employee then the assumed start date would be the 6th of the month prior to the payment.

  2. If an employer submits an EAS with a start date for an employee that HMRC has no record of on NPS, a record will be created on NPS. The employment will have an assumed start date of the first day of the tax year, the creation source will display RTI and the employment start date source will display RTI Align.

  3. If an EAS is received with no start date for an employee that HMRC has no record of on NPS, as before, a record will be created on NPS. The employment will have an assumed start date of the first day of the tax year, the creation source will display RTI and the employment start date source will display RTI Service.

Leavers

When an employee leaves an RTI employment, leaving details will be included on the FPS instead of submitting a form P45 to HMRC. However, employers will still be required to give departing employee’s a form P45.

To check whether an employment held on NPS has been ceased by an RTI submission, view the cessation source and end date source on the Employment Details Screen. The screen will display differently depending on how the source ceased.

Where a live NPS employment has been ceased by an EAS and the EAS held an end date

  • The cessation source will show RTI
  • End date source will show RTI Align

Where a live NPS employment has been ceased by EAS as a consequence of it not being held on the alignment submission

  • The cessation source will show RTI service
  • End date source will show RTI

Where live employment has been ceased by FPS

  • The cessation source will show RTI
  • End date source will show FPS

Death of an employee or pension recipient

There is no specific date of death field or deceased indicator on the FPS; this is to prevent erroneous dates of death being sent to HMRC by employers or pension providers. The date of death will be notified to NPS from DWP in the usual way and employers and pension providers will enter the date of death as the date of leaving on the last FPS for that individual.

Employer Payment Summary Submission (EPS)

An Employer Payment Summary (EPS) will include data to enable HMRC to make deductions from the employer’s liability calculated from the data submitted using FPS.

Each time an employer pays their employees they must submit an FPS to HMRC. This gives details of the tax, National Insurance and student loan deductions they have deducted which they need to pay over to HMRC. It also provides details of any Statutory Maternity Pay (SMP), Statutory Adoption Pay (SAP), Ordinary Statutory Paternity Pay (OSPP) or Statutory Shared Parental Pay (ShPP) they have paid out to employees. Details of any Statutory Sick Pay (SSP) paid to employees is only required if the employer is able to make a claim for recovery in respect of that SSP.

However, the FPS does not show how much the employer is able to recover in respect of the statutory payments made because recovery depends on factors that are looked at from an employer or PAYE scheme perspective, nor does it show other deductions they are entitled to make for NIC holiday or Construction Industry Scheme (CIS) deductions suffered. The EPS enables the employer to report Statutory Payments Recovered, NIC Compensation on Statutory Payments, CIS deductions suffered or deductions the employer is entitled to make under the Regional Employer NIC Holiday for new businesses. HMRC then deduct the EPS amounts from the liabilities calculated as due for payment from the FPS the employer submitted for payments made in the relevant tax month or tax quarter.

For further information see PAYE55001.

No payment due

If no payments are made to employees within a pay period the employer will not be required to make an FPS return. They should however submit an EPS for each pay period with the appropriate field checked to indicate that no return or payment is due for this pay period. They need to do this even if they are a quarterly payer. Failure to submit a Nil EPS will result in a filing penalty and DMB pursuing a specified charge for that pay period.

End of Year Record (EOYR)

The regular submission of payment information in the form of FPS, allows details of ‘Taxable Pay to Date’ and ‘Total Tax to Date’ for employees to be built over the course of the tax year, therefore removing the requirement for a P35 ‘Employer Annual Return’ with supporting ‘End of Year Summary’ P14s.

At the end of the tax year, for each RTI employment which was live during the year, and for which the employer was operating under the RTI system, the RTI Service will create an EOY Record (EOYR) from the FPS details submitted. The EOYR will be transferred from RTI to NPS, and the automatic EOY process will commence, during which NPS will attempt to match the record to an individual employment record. Matching rules will be used to ensure the EOYR is posted against the correct record. Processing of EOYR will be staggered into three stages. Where the employer has indicated on either an FPS or EPS that they have made their final submission for the tax year, or the employment ceased during the year, the EOYR created will be included in the first stage; ‘Stage 1’ of the EOY process.

If the employer has not indicated that they have made their final submission, but FPS information is received for an individual which includes payments for Month 12 or Week 52, the EOYR created will be included in ‘Stage 2’ of the EOY process, which will commence after the processing of Stage 1 cases has been completed.

For any remaining cases EOYR will be processed at Stage 3, which will commence after the processing of Stage 2 cases has been completed.

Earlier Year Update (EYU / EYU(I))

Earlier Year Updates are returns that adjust a customer End of Year Record (EOYR) details for a given year.

In the case of the update being from an employer the adjustment / return will display in the NPS RTI Summary screen as an EYU and in the case of the adjustment being made within RTI itself (for example to move payment details in year to account for a scheme merger) it will display as an EYU(I) within the screen, Within the RTI Summary screen the ‘Pmt Rcvd Date’ (Payment Received Date) in respect of an

  • EYU - will be the system date at the time the EYU is sent to NPS and it will always be a date after the end of the tax year the return refers to
  • EYU(I) - will be the system date at the time the EYU is sent to NPS / date on which the internal adjustment within RTI takes place and it can be a date within the tax year the adjustment refers to

EYU and EYU(I) show the adjusted figures that need to change on the previously held EOYR to create a corrected EOYR for the year. For example, if the previously held EOYR shows Pay of £2000.00 but the actual figure was £2500.00, the EYU / EYU(I) amount would be for £500.00 and in a case where the actual Pay was £1500.00 it would be for minus £500.00.

If an employer is correcting an error after the tax year end or has missed FPS for an earlier year

  • Before 19 April they will send a revised FPS with revised totals of pay and tax
  • After 19 April they need to send an EYU with just the difference (plus or minus)