10. Changing paydays
You can move your payday to a different day or change how often you pay your employees.
Moving your payday
If the new payday is in the same tax month or week, treat the first new payment as an extra payment for that period.
You don’t need to do anything special when recording pay if the new payday is in a different tax month or week.
HM Revenue and Customs (HMRC) has guidance on how to calculate National Insurance for your employees after changing paydays.
Changing how often you pay your employees
Most payroll software can automatically manage any changes to how often you pay your employees (for example from monthly to weekly) and work out deductions correctly.
Using Basic PAYE Tools
There are some limitations on when you can make these changes if you use HM Revenue and Customs’ (HMRC) Basic PAYE Tools.
Paying your employees more often
If you’ve not already paid your employees, use the new earnings period (in the ‘Pay frequency’ field) in your Full Payment Submission (FPS) when you next pay them.
If you’ve paid your employees, you can use the new earnings period from the next tax month.
Paying your employees less often
If a payment from your old pay period also takes place in your new pay period, calculate and deduct National Insurance on both. Don’t deduct more National Insurance than would’ve been due on the combined total of both payments.
If an employee also joins your contracted-out pension scheme during this period, deduct National Insurance at the contracted-out rate on the total of both payments.
Deduct tax based on the new earnings period the next time you pay your employees.
Annual payroll scheme for PAYE
If you pay your employees only once a year, and all in the same tax month, you can register with HMRC as an ‘annual scheme’.
This means you send reports and make payments to HMRC annually. If you pay your employees on different days in the same tax month, you need to send an FPS on or before each payday. You don’t need to send an Employer Payment Summary (EPS) for the months when you don’t pay your employees.
To register, contact the employer helpline and tell them which month you pay your employees. You’ll need your 13-character Accounts Office reference number - this is on the letter HMRC sent you when you registered as an employer.
Changing when you pay your employees
If you change the month you pay your employees, send an FPS in the month that you want the new annual payment month to move to. If it’s later than the month you usually pay your employees, you’ll need to send an EPS for that month to tell HMRC you’re not paying anyone.
If you usually pay your employees in August but want to change to September, send an EPS in August and an FPS in September.
If you send more than one FPS in a year, HMRC will assume you no longer wish to operate as an annual scheme and send you a letter to confirm.