So, you found something wrong with your FPS or EPS? If so, some of the regular entries you may need to correct include:
- Amount recorded in an Employer Payment Summary (EPS)
- Employee start or leaving dates
- National Insurance category letters
- Payment dates
- Employee pay or deductions
- Reports sent in advance
- Your employee’s personal information
- The amount you owe in Apprenticeship Levy (since April 2017) if you, or any connected employers, have an annual pay bill over £3 million
Important: HMRC can charge a penalty for deliberate mistakes. You can read further guidance on compliance checks for penalties of inaccuracies in returns or documents (CC/FS7a) on the GOV.UK website.
If You Report the Wrong Pay or Deductions
You can correct an error made in the current tax year by updating the year-to-date figures in your next regular Full Payment Submission (FPS).
However, you would need to correct the wrong pay or deductions made in the previous tax year by submitting an Earlier Year Update (EYU) or a further FPS showing the correct year to date figures.
If you send an EYU for previous tax years, it must be when you were reporting online in real time, and show the difference between the original report and the corrected figure.
Note: You can download HMRC’s free payroll software called ‘Basic PAYE Tools’ if yours does not have a facility to send an EYU. Follow a different process to correct a mistake in your final FPS of the year.
Correcting a Pension Death Benefit (or flexibility payment)
As a pension administrator, there may be a situation where you have to correct a flexibility payment or death benefit payment. If so, you would need to:
- Select the appropriate indicator (e.g. ‘pension flexibility payment’ or ‘pension death benefit payment’).
- Update the relevant field or fields (e.g. ‘pensions drawdown taxable payment’ or ‘pensions drawdown non-taxable payment’). The correction should show the difference between the original report and the corrected figures.
Note: If an employee has left your employment, you must include them in the next FPS and correct their year-to-date figures. Be sure to include their original ‘Date of leaving’ and insert the same or a later ‘Payment date’ than the one showing on their final FPS.
How to Correct the Payment Date in FPS?
As a rule, you should be using the actual date that you paid your employees in your FPS. But, you can correct the payment date by sending an additional FPS showing the amendment.
The correction should contain the phrase ‘H – correction to earlier submission’ in the field marked ‘Late reporting reason’.
HMRC will be able to apply the correction to the relevant month – providing you send the corrected FPS no later than the 19th of the tax month that contained the original FPS.
Note: HMRC provides further guidance on aligning payroll to the correct tax period if the wrong date was from a different tax month.
Correcting an Employee’s Start or Leaving Date
One of the common mistakes with payroll is putting the wrong start or leaving date for an employee in the FPS. But, you can update your payroll records with the correct date.
Even so, it is important not to report the amendment in the next FPS that you send. Doing so would most likely create a duplicate record for that particular employee.
Correcting an Employee’s Personal Information
What if you make a mistake when entering the personal details of an employee? If it happens, you can make the correction in your next FPS.
Updating several details at the same time in the same FPS (e.g. their name as well as their gender) is likely to duplicate your payroll records. This also means you may get an incorrect PAYE bill.
Furthermore, there are several other tasks to complete if any of your employees change important information about themselves (e.g. address, surname), such as:
- Update your payroll records (employer’s responsibility).
- Tell HMRC about a change to your personal details (without delay).
How to Correct FPS Reports Sent in Advance?
Sending an advance FPS report will occur most often when an employee leaves your employment. Even so, you can still correct it – even after you sent it – by:
- Submitting another FPS for the actual tax month that the correction relates to. It would be important to fill in all the relevant fields and you may also need to revise the year-to-date figures.
- Amending any other Full Payment Submission (FPS) reports sent in advance that the new details affect.
Correcting an Employee’s NI Category Letter
The method used to rectify an employee’s National Insurance category letter will depend on why it changed, and whether it happened in the current tax year (or a previous one).
Using the Wrong Category Letter in Current Tax Year
You should report the error in your next FPS file if you used the wrong category letter in the current tax year, by:
- Adding the category letter that was used incorrectly.
- Putting ‘0’ in all National Insurance fields for this particular category letter (except ‘Employee’s NICs this payment’) and then entering the actual amount that you have repaid or recovered.
- Inserting the correct NI category letter and then entering the correct year-to-date National Insurance for the changed category letter.
- Putting ‘0’ in all National Insurance fields for the incorrect category letter for the rest of the tax year. This part is not necessary if the category should not have been used.
Important: Some payroll software tools allow you to fix this by adjusting the net pay. Even so, you must keep a record of any changes made.
Employee Category Letter Changed (in the tax year)
Follow these steps for your next FPS if your employee’s National Insurance category letter changed during the current tax year:
- Continue reporting your year-to-date information for the old category.
- Insert ‘0’ in all fields titled ‘In this pay period’ for this category and then use the field marked ‘Employee’s NICs this payment’ to adjust any underpayment or overpayment of National Insurance.
- Add the appropriate category letter and then enter the correct year-to-date National Insurance for this particular NI category letter.
Fixing Mistakes from Previous Tax Years
What if the mistake was made in a previous tax year? If so, you need to send an Earlier Year Update (EYU), with:
- Negative amounts in all the National Insurance year-to-date fields in the incorrect category letter. Doing so will reduce your employee’s National Insurance to zero.
- The appropriate NI category letter and the correct year-to-date National Insurance.
Your payroll software may allow you to send an FPS instead to fix a mistake in a previous tax year. If so, send it with the correct NI category letter and the correct year-to-date National Insurance.
Errors Causing Overpayments or Underpayments
How to Correct an EPS?
If the correction is for the current tax year, you can send an EPS showing the correct year-to-date figures. The EPS needs to have the correct year-to-date figures for the actual tax year that you made the error, if it relates to a previous tax year.