In 2013, the Government introduced Real Time Information (‘RTI’) for payroll submissions. The idea was to make the submission of payroll information more efficient by submitting information every time an employer pays their employees.
RTI means that employers now make two submissions electronically – a Full Payment Submission and an Employer Payment Summary.
What is a Full Payment Submission?
A Full Payment Submission (‘FPS’) is information that’s sent to His Majesty’s Revenue & Customs (‘HMRC’) on or before the date that an employer pays their employees. It’s a submission to tell HMRC about payments to employees and what deductions have been made to their pay. It must be sent each time an employer runs payroll and must contain some specific information. This information includes:
- Employee name, address, National Insurance(‘NI’) number and tax code
- New starter or leaver information
- The payment that is to be/has been made to the employee and any relevant deductions that have been made to their pay, including NI, tax and student loan repayments.
Even when an employee hasn’t worked within the pay period, but is still employed by the business, their information should be contained in the FPS.
The company pay run must be completed in full and all records updated before the FPS is submitted to HMRC.
What happens if my FPS isn’t submitted on time?
The FPS must be made on or before the day that employees are paid. If the FPS is submitted after this date, HMRC require an explanation/reason for the late submission.
They use this information to determine if a penalty should be imposed on the employer for the late submission. When a submission is late, the reason must be selected before the user is able to continue. There are eight (8) reporting reason codes from HMRC:
A Notional payment: Payment to expat by third party or overseas employer
B Notional payment: Employment related security
C Notional payment: Other
D Payment subject to Class 1 NICs but P11D/P9D for tax
E Micro Employer using temporary ‘on or before’ relaxation
F Impractical to report work done on the day
G Reasonable excuse
H Correction to earlier submission
What happens if I make an error on my FPS?
If an employer makes a mistake on the FPS, the company’s Pay As You Earn (‘PAYE’) – the amount of deductions that are owed to HMRC – may be incorrect. Employers may need to correct any of the following:
- Pay or deductions
- Payment dates
- Start dates or leaving dates of employees
- Employee information – including tax codes or NI category letters
- Reports sent in advance
If a mistake has been made, the year-to-date figures in the FPS for the next regular pay run need to be amended. There’s no need to re-submit an FPS at the time of discovering the error, but it should be corrected in the next submission.
HMRC may levy penalties for errors in submissions, but this is determined whether the mistake was due to lack or reasonable care or whether it was done deliberately. They also take into consideration whether the notificationof the error was provided unprompted by the employer or whether it was as a result of an HMRC investigation into errors and whether the employer tried to conceal the error or not.
What is an Employment Payment Summary?
An Employment Payment Summary (‘EPS’) is a submission that reports values to HMRC that are not included on the FPS. The values included in the EPS may subsequently affect the payments that the employer makes to HMRC.The EPS should be submitted to HMRC at the same time as the FPS if the employer needs to:
- Reclaim payments to employees for statutory leave and pay, including maternity and paternity pay; adoption, parental bereavement or shared parental pay
- Reclaim the Construction Industry Scheme (‘CIS’) deductions
- Claim the Employment Allowance (claimed annually)
- Make Payment for the Apprenticeship Levy, if conditions apply
The deadline for HMRC to receive an EPS is 19th of the following tax month. This allows them to apply any reduction – forexample, statutory pay – on what an employerowes on their FPS.
What happens if I make an error on my EPS?
If errors are found on a submitted EPS, the gov.uk site recommends sending a corrected EPS as soon as possible. When a mistake has been identified in the current tax year, the correct year-to-date figures should be inputted and the file re-submitted.
If an EPS is found to have errors for a previous tax year, an EPS with the correct year end figures should be sent for the tax year when the error occurred.
How does PayCaptain help?
As a multiple award-winning fully outsourced payroll provider, PayCaptain helps businesses run their payroll from end to end. The PayCaptain solution allows for the employer, or the PayCaptain team, to enter all the employee personal information, hours worked, absences, bonus and pension information, so that staff are paid effectively and on time.
Once the pay run has been approved by the employer, PayCaptain automatically transfers the FPS and EPS, if applicable, to HMRC before making payments into employees’ accounts, making sure your team are paid correctly, on time, first time and that HMRC has the submissions on time.
With the PayCaptain mobile app, employees can take advantage of a host of innovative functionality to improve their financial well-being. PayCaptain provides employees with interactive payslips that explains IncomeTax and National Insurance contributions so they always know what has been deducted and how the deductions have been calculated.
PayCaptain Payroll Solutions Limited, www.paycaptain.com is an HR/FinTech company that delivers a fully automated cloud outsourced payroll service. The solution contains many unique and innovative features for employees, helping them to take control of their pay and increase their financial well-being. PayCaptain is a payroll solution that helps employers pay their workforce, regardless of income and personal circumstances. The solution also incorporates functionality that's specifically designed to positively impact financial resilience for people struggling with money, or vulnerable and low-income employees.
PayCaptain was named Software Product of the Year at the The Chartered Institute of Payroll Professionals (CIPP) Annual Excellence Awards in October 2022.
PayCaptain is the world’s first payroll company to be B-Corporation certified. To read more about B-Corporations, visit www.bcorporation.net. The company has been recognised and rewarded with two B Corp ‘Best for the World’ awards for being within the top 5% of highest scorers within both the Workers and Governance impact areas in the B Corporation B Impact Assessment.