2. You made a mistake in your FPS or EPS

Your PAYE bill might be wrong if you made a mistake in your FPS or EPS. You might have to correct:

  • pay or deductions
  • payment dates
  • start or leaving dates for your employee
  • employee information
  • reports sent in advance
  • National Insurance category letters
  • amounts in your Employer Payment Summary (EPS)
  • the Apprenticeship Levy you owe (starting from April 2017) if you, or employers you’re connected to, have an annual pay bill of more than £3 million

You’ll only be charged a penalty for a mistake if you didn’t take reasonable care or did it deliberately.

If you’ve reported the wrong pay or deductions

To correct a mistake made in the current tax year, update the year-to-date figures in your next regular Full Payment Submission (FPS).

For previous tax years, send an Earlier Year Update (EYU) showing the difference between what you originally reported and the correct figure. If your payroll software can’t send an EYU, you can use HMRC’s Basic PAYE Tools.

You can only use an EYU for tax years when you were reporting online in real time.

The rules are different if you find a mistake in your final FPS of the year.

Correct a pension death benefit or flexibility payment

If you’re a pension administrator who needs to correct a flexibility payment or death benefit payment, you must:

  • select the ‘pension flexibility payment’ or ‘pension death benefit payment’ indicator
  • update the ‘pensions drawdown taxable payment’ or ’pensions drawdown non-taxable payment’ fields (or both) with the difference between what you originally reported and the correct figures

If your employee has stopped working for you

Include them in your next FPS and correct their year-to-date figures. Include their original ‘Date of leaving’ and put the same or a later ‘Payment date’ than the one shown on their final FPS.

Correct the payment date in your FPS

You should use the date you paid your employees in your FPS.

Send an additional FPS with the correct payment date if you’ve sent one with the wrong payment date. Write ‘H - correction to earlier submission’ in the ‘Late reporting reason’ field.

Send your corrected FPS by the 19th of the tax month after you sent your original FPS. HMRC will apply the correction to the right month.

If the wrong date was in different tax month, you must realign your payroll to the correct tax period.

Correct an employee’s start or leaving date

Update your payroll records with the correct date if you put the wrong start or leaving date for an employee in your FPS.

Don’t report the amendment in your next FPS as this may create a duplicate record for the employee.

Correct your employee’s personal information

Correct your next FPS if you’ve made a mistake with your employee’s personal details.

Don’t report updates to more than one of your employee’s personal details (for example their name, date of birth or gender) in the same FPS. Your payroll records may be duplicated if you do, and your PAYE bill might be wrong.

If your employee’s details (for example their address or surname) change:

Correct FPS reports sent in advance

If you’ve sent FPS reports in advance that need to be corrected (for example because an employee leaves), you should:

  • send another FPS for the tax month the correction relates to, making sure you fill in all relevant fields and revising the year-to-date figures if needed

  • correct any other FPS reports you sent in advance that are affected by the change

Correct an employee’s National Insurance category letter

How you do this depends on why the category letter changed, and in which tax year.

You’ve used the wrong category letter in the current tax year

Report the mistake in your next FPS.

  1. Add the category letter you’ve used incorrectly.

  2. Put ‘0’ in all National Insurance fields for this category letter except ‘Employee’s NICs this payment’, and enter the amount you have repaid or recovered here, for example put -£300 if you’re repaying an employee’s overpayment of £300.

  3. Add the correct category letter, and enter the correct year-to-date National Insurance for this category letter.

  4. Put ‘0’ in all National Insurance fields for the incorrect category letter for the rest of the tax year - you don’t need to do this if the category should never have been used.

Some software allows you to correct this by adjusting net pay. You’ll still need to keep a record of the change.

Your employee’s category letter changed during the tax year

In your next FPS:

  1. Continue to report year-to-date information for the old category.

  2. Put ‘0’ in all ‘In this pay period’ fields for this category, and use the ‘Employee’s NICs this payment’ field to adjust any underpayment or overpayment of National Insurance.

  3. Add the correct category letter, and enter the correct year-to-date National Insurance for this category letter.

If the mistake was in a previous tax year

Send an EYU with:

  • negative amounts in all the National Insurance year-to-date fields in the incorrect category letter, to reduce the employee’s National Insurance to zero

  • the correct category letter and correct year-to-date National Insurance

If the mistake caused an overpayment or underpayment

You must to correct your employee’s National Insurance deductions if they paid too little or too much because they were on the wrong category letter.

Correct an EPS

To correct a mistake in the current tax year, send an EPS with the correct year-to-date figures.

For previous tax years, send an EPS with the correct year-to-date figures for the tax year where you made the mistake.