Aligning payroll to the correct tax period

Question

Accepted Answer

When you send an Full Payment Submission (FPS) to HM Revenue and Customs, you need to include the date you paid your employees.

You鈥檒l have to realign the payment date of your FPS with the tax month or week if:

you鈥檝e changed the day you pay your employees
you sent an FPS where you used the date you ran payroll (instead of the date you paid your employees) and this date related to a different tax month

Example

You ran your payroll on 4 October before paying your employees on 7 October. On your FPS you used a payment date of 4 October, so the report is allocated incorrectly to the previous tax month (which ended on the 5th).

How you realign your payroll depends on whether you鈥檒l next pay your employees in the same tax period as your previous FPS (the one with the incorrect or out-of-date payment date).

Your next FPS is due in the same tax period

Send another FPS, on or before your employees鈥� payday, with the correct payment date. Treat this figure as an extra payment for that tax period.

This may mean your employee pays more tax in this period.

Your next FPS is due in the following tax period

Send an FPS (with the correct payment date) on or before your employees鈥� next payday as normal, giving year-to-date figures.

Your next FPS is due in a later tax period

When realigning payroll, you may not need to report your employees鈥� pay for a tax month or week if their next payday isn鈥檛 until later.

Example

You ran your payroll on 1 June before paying your employees on 7 June. On your FPS you incorrectly used a payment date of 1 June. Your employee鈥檚 next payday is 7 July, so you don鈥檛 need to send an FPS for the tax month that runs from 6 June to 5 July.

If you need to 鈥榮kip鈥� a tax month or week in this way, you鈥檒l need to send an FPS to correct your employees鈥� National Insurance.

Correcting your employees鈥� National Insurance

Correct your employees鈥� National Insurance by sending an additional FPS - at the same time or after you realign your payroll.

Fill in your FPS using the values in the following table, keeping all of the other 鈥榊ear to date鈥� entries the same from the last FPS (or, if it鈥檚 the first of the tax year, report only from the most recent tax period).

Field	What to fill in
National Insurance category letter	Use the same National Insurance category letter as you reported on your last FPS. If you used more than one, send another FPS for the category letters you didn鈥檛 use, showing the same year-to-date figures
Gross earnings for NICs in this period	Put 鈥�0.00鈥橽u003c/td>
Earnings at the Lower Earnings Limit (LEL) year to date	If you pay your employee 拢112 a week (拢486 a month) or more, add their total pay since 6 April to: 拢112 (if you pay them weekly), 拢224 (if you pay them fortnightly) or 拢486 (if you pay them monthly)
Employee contributions payable in this period	Put 鈥�0.00鈥橽u003c/td>
Total of employee鈥檚 contributions payable year to date	Put the same figure as on your last FSP
Employer鈥檚 contributions payable in this pay period	Put 鈥�0.00鈥橽u003c/td>
Total of employer鈥檚 contributions payable year to date	Put the same figure as on your last FPS

You鈥檒l need to send an Employer Payment Summary for the skipped pay period if you don鈥檛 send any FPS reports.

If your payroll software can鈥檛 send corrections

Some software can only send corrections like this at the end of the tax year, in an Earlier Year Update (EYU) report. In the 鈥楨arnings at the LEL year to date鈥� field, put the amount for one pay period only.

If your software can鈥檛 send EYU reports, you can use Basic PAYE Tools.

Other things you might need to do

As well as affecting their National Insurance, your employee might pay too much tax and need to apply for a refund. Their P60 might also not match their salary - if they ask, you can tell them why and give them a letter confirming how much you鈥檝e paid them.

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