1. Correcting pay or deductions

If you’ve made a mistake with an employee’s pay or deductions, you can correct it by updating the year-to-date figures in your next regular Full Payment Submission (FPS).

You can also correct it by sending an additional FPS before your next regular FPS is due. Update the year-to-date and ‘in this pay period’ figures with the difference between what you originally reported and the correct figures. Put the same payment date as the original FPS.

If you’ve paid your employee the wrong amount

Send an additional FPS either:

  • on or before the date you pay your employee an additional amount, if you’ve underpaid them
  • by the 19th of the tax month after you sent your original FPS - HM Revenue and Customs (HMRC) will include the correction in that month’s PAYE bill

You’ll need to include:

  • the difference between what you originally reported and the correct amount in the ‘In this pay period’ field
  • updated the year-to-date figures, and put ‘H - Correction to earlier submission’ in the ‘Late reporting reason’ field

Correcting an employee’s National Insurance deductions

If the mistake was in this tax year

Repay or deduct the balance from your employee. Update the year-to-date figures to the corrected amount in your next regular FPS or send an additional FPS.

If you deducted too little, you can’t recover more than the employee’s National Insurance contribution due that month.

Example

You deducted £100 too little in January. In February, your software calculates an £80 National Insurance deduction, which means you can recover up to £80 towards the underpayment that month (a £160 deduction in total).

Recover the remaining £20 in another month.

Pay any underpayment to HMRC straight away.

If the mistake was in a previous tax year

Send an Earlier Year Update (EYU) with the difference between what you originally deducted and the correct amount.

Use the EYU to tell HMRC if you’ve repaid or deducted the balance from your employee.

If you deducted too little, you can’t recover:

  • more than the National Insurance due that month
  • any amount from your employee

Correcting an employee’s student loan repayments

If the mistake was in this tax year

Repay or deduct the balance from your employee. Update the year-to-date figures to the corrected amount in your next regular FPS or send an additional FPS.

If you deducted too little, you can’t recover more than the student loan repayment due that month.

Example You deducted £50 too little in June. In July, your software calculates a £30 student loan deduction, which means you can recover up to £30 towards the underpayment that month (a £60 deduction in total).

Recover the remaining £20 in another month.

If the mistake was in a previous tax year

If you deducted too little, you don’t need to do anything. If your employee wants to know how it affects them, they can contact the Student Loans Company.

If you deducted too much, repay your employee and:

  • if you noticed the mistake on or before 19 April, send an FPS with the corrected ‘Student loan repayment year to date’ figure as of 5 April for the previous tax year

  • if you noticed the mistake after 19 April, send an Earlier Year Update (EYU) with the difference between what you originally deducted and the correct amount