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As an employer operating PAYE as part of your payroll, you need to complete certain tasks during each tax month. Tax months run from the 6th of one month to the 5th of the next.

On or before your employees鈥� payday

Every time you pay your employees, use your payroll software to:

1. Record their pay - include their salary or wages and any other pay.

2. Calculate deductions from their pay, like tax and National Insurance.

3. Calculate the employer鈥檚 National Insurance contribution that you鈥檒l need to pay on their earnings above 拢242 a week.

4. Produce payslips for each employee (you can use different software if yours does not have this feature).

5. Report their pay and deductions to HMRC in a Full Payment Submission (FPS).

In the next tax month (starting on the 6th)

You can view what you owe from your FPS online from the 10th.

1. Send an Employer Payment Summary (EPS) by the 19th to claim any reduction on what you鈥檒l owe HMRC (for example statutory pay).

2. View the balance of what you owe in , within 2 days (or by the 14th if you sent the EPS before the 11th).

3. Pay HMRC by the 22nd (or the 19th if paying by post) - you may have to pay a penalty if you do not.

If you usually pay less than 拢1,500 per month, you may be able to pay quarterly instead of monthly. Contact the payment helpline to find out.

Late reporting

HMRC will send you a late filing notice if you鈥檝e paid any employees and do not send an FPS or send one late. They can also charge you a penalty, unless you have a valid reason for reporting late.

Late, missing or incorrect payroll reports can also affect your employees鈥� income-related benefits, such as Universal Credit.

Record your employees鈥� salary or wages in your payroll software. Include everyone you pay, even if they get less than 拢123 a week.

Recording other types of pay

Statutory pay

You may have to pay your employee:

• Statutory Sick Pay (SSP)
• statutory pay for parents

Statutory pay for parents includes:

• maternity pay
• paternity pay
• adoption pay
• parental bereavement pay
• shared parental pay

You must record these in your software - they鈥檙e taxed like normal pay.

Expenses and benefits

Expenses or benefits like uniforms or company cars are reported separately at the end of the tax year. Check the rules to find out what counts as expenses and benefits, and what you should record in your software as normal pay.

Tips and other pay

Treat tips to your staff as normal pay if they鈥檙e paid into your till - this includes tips added to your customers鈥� card or cheque payments. The rules are different if tips are given straight to your employees by customers or paid into a tronc.

Other payments you may give your employee that you should record as normal pay include:

• bonuses
• commission
• holiday pay (unless you pay it in advance or use a holiday pay scheme)
• payments for time your employee has spent travelling
• passenger payments, except the first 5 pence per mile
• medical suspension payments, given to an employee you鈥檝e suspended for health reasons
• maternity suspension payments, given to an employee you鈥檝e suspended for her, or her baby鈥檚, health
• guarantee payments, paid to an employee for a day they do not work (and not paid holiday)
• office holders鈥� payments (honoraria), given to employees for providing a service, for example being your company鈥檚 sports-club secretary
• payments that can be , for example cheques, Savings Certificates or Premium Bonds
• inducement payments (鈥榞olden hello鈥� payments)
• cash prizes for competitions you run

You must follow different rules for:

• non-cash payments (like shares or commodities)
• cash in hand or guarantee payments
• employee incentive awards

Your payroll software will calculate how much income tax and National Insurance to deduct from your employees鈥� pay. These deductions are worked out using each employee鈥檚 tax code and National Insurance category letter.

You may also need to deduct student loan repayments, pension contributions, Payroll Giving donations and child maintenance payments.

Student and Postgraduate loan repayments

Use your payroll software to record if your employee needs to make student loan repayments - both in your software and on employee payslips.

You鈥檒l need to calculate and deduct how much they need to repay based on which plan they鈥檙e on. They repay:

• 9% of their income above 拢24,990 a year for Plan 1
• 9% of their income above 拢27,295 a year for Plan 2
• 9% of their income above 拢31,395 a year for Plan 4
• 6% of their income above 拢21,000 a year for Postgraduate loans

Pensions

Make pension deductions after you take off National Insurance. You normally make pension deductions before you take off tax - check with your workplace pension provider.

You鈥檒l also need to pay any employer contributions into your employee鈥檚 pension.

Payroll Giving

Your employees can donate to charity directly from their pay before tax is deducted using Payroll Giving.

Register with a Payroll Giving agency to set up a scheme. They鈥檒l let you know how to make deductions.

As well as the usual payroll records, you must also keep the agency contract, employee authorisation forms and details of payments to the agency.

Child maintenance

You may need to deduct child maintenance directly from a paying parent鈥檚 earnings or pension.

You must give your employees and your 鈥榳orkers鈥� a payslip on or before their payday.

What to include

Payslips must show:

• pay before any deductions (鈥榞ross鈥� wages)
• deductions to pay like tax and National Insurance
• pay after deductions (鈥榥et鈥� wages)
• the number of hours worked, if the pay varies depending on time worked

Payslips can also include information like your employee鈥檚 National Insurance number and tax code, their rate of pay, and the total amount of pay and deductions so far in the tax year.

Producing payslips

You may be able to produce payslips using your payroll software, if it has this feature. You can use different software if it does not.

You can either print payslips to give to your employees, or you can send them electronically.

Use your payroll software to send a Full Payment Submission (FPS) to tell HM Revenue and Customs (HMRC) about payments to your employees and what deductions to their pay you鈥檝e made.

When to send your FPS

Send the FPS on or before your employees鈥� payday, even if you pay HMRC quarterly instead of monthly.

You must enter the usual date that you pay your employees, even if you pay them earlier or later. For example, if you pay your employees early because your usual payday falls on a Bank Holiday, you should still enter your regular payday.

Early reporting

You can send an FPS before your regular payday, for example if your payroll staff are going on holiday.

Do not report too early - you鈥檒l need to send a corrected FPS to update HMRC if information changes, for example an employee leaves or changes tax code.

You cannot send reports for the new tax year before March.

Late reporting

There are some expectations when you can send an FPS after payday.

Completing and sending an FPS

You鈥檒l need to enter your PAYE reference and Accounts Office reference in your software. HMRC will have sent this to you after you registered as an employer.

To complete and send the FPS, follow your payroll software鈥檚 instructions.

HMRC has guidance on what to put in each field on an FPS, including:

• employer information
• employee information - only include employees you鈥檝e paid
• pay and deductions
• National Insurance information

You can split your FPS into batches if it鈥檚 easier for you, for example one for employees and one for directors.

There are special rules for calculating deductions if your employee has more than one job with you.

After you鈥檝e sent your FPS

In the next tax month (which starts on the 6th), you can:

• view how much tax and National Insurance you owe in from the 10th
• claim any reduction on what you鈥檒l owe HMRC (for example statutory pay) by sending an Employer Payment Summary (EPS) by the 19th
• pay HMRC the balance by the 22nd (or the 19th if paying by post)

If you need to make an extra payment to your employee, you can send an FPS after payday, in addition to the one you鈥檝e already sent. The extra FPS needs to be sent before your next regular report (if your software has this feature).

If you made a mistake in your FPS

If you find any errors in your FPS, send a corrected FPS as soon as possible.

Reporting extra information

You need to report more information on an FPS if:

• it includes a new employee
• an employee leaves
• it鈥檚 the last report of tax year
• you start paying someone a workplace pension

HMRC has guidance on what to put in each field on an FPS.

You may also need to report extra information about certain employee changes, for example they take a leave of absence or become a director.

Use your payroll software to send an Employer Payment Summary (EPS) as well as a Full Payment Submission (FPS) if you:

• reclaim statutory maternity, paternity, adoption, parental bereavement or shared parental payments - even if you got an advance payment from HM Revenue and Customs (HMRC) to cover them
• claim the Employment Allowance - do this once each tax year
• can reclaim Construction Industry Scheme (CIS) deductions as a limited company
• pay the Apprenticeship Levy if you, or employers you鈥檙e connected to, have an annual pay bill of more than 拢3 million

EPS deadlines

Send an EPS by the 19th of the following tax month for HMRC to apply any reduction (for example statutory pay) on what you鈥檒l owe from your FPS.

The tax month starts on the 6th.

Sending an EPS

To complete and send the EPS, follow your payroll software鈥檚 instructions. Find out what to put in each field by reading guidance on what to report in an EPS.

Use HMRC鈥檚 Basic PAYE Tools if your software cannot send EPS reports.

After you鈥檝e sent your EPS

Once you鈥檝e sent your EPS, you can:

• view what you鈥檝e claimed and the balance of what you owe on within 2 days (or by the 14th if you sent the EPS before the 11th)
• pay HMRC by the 22nd (or the 19th if paying by post)

If you made a mistake in your EPS

If you find any errors in your EPS, send a corrected EPS as soon as possible.

If you do not pay any employees in a tax month

Do not send an FPS. Send an EPS by the 19th after the tax month you did not pay any employees. The tax month starts on the 6th.

HMRC has guidance on what to put in your EPS if you鈥檝e not paid anyone in a period.

If you do not send an EPS, HMRC may:

• send you a notice through PAYE Online
• estimate how much you should pay
• charge you a penalty

If you do not pay anyone for a longer period

You can tell HMRC in advance that you will not be paying any employees for between one month and 12 months. To do this, enter dates in the 鈥楶eriod of inactivity鈥� fields in your EPS.

Every month you have to pay HM Revenue and Customs (HMRC):

• the tax and National Insurance (and any other deductions) you owe as reported on your Full Payment Submission (FPS) in the previous tax month
• minus the reductions on any Employer Payment Summary (EPS) you sent before the 19th in the current tax month

Pay what you owe by the 22nd of the month (or the 19th if paying by post) - you may have to pay a penalty if you do not.

Viewing what you owe

View to see the reports you鈥檝e sent and to find out what you owe.

How to pay

You can pay your PAYE bill in a number of different ways.

Interest and penalties

HMRC will usually tell you if they think you鈥檝e paid late - either in a letter or a notice through PAYE Online. You鈥檒l be charged interest daily at the standard rate.

You may be charged a penalty if you do not pay on time or in full.

If you send a late Full Payment Submission (FPS) without a valid reason, you may get:

• an online penalty warning message for the first late FPS you send each month
• charged a penalty

When you can send a late FPS report

In certain situations you can send a Full Payment Submission (FPS) after you pay your employee.

Put the reason for reporting after payday on your FPS for each late submission. If you do not, or if HMRC disagrees with the reason or you do not send an FPS, they may send you an online penalty warning message and a penalty.

Viewing late FPS reports in your HMRC online account

If you send an FPS in the same tax month as you paid your employees, you can view the report in from the 10th of the next tax month.

This is different if you send an FPS in the tax month after payday.

You need to report more information on a Full Payment Submission (FPS) if:

• it includes a new employee
• an employee leaves
• you start paying someone a workplace pension
• it鈥檚 the last report of the tax year
• an employee changes their address

You may also need to tell HM Revenue and Customs (HMRC) if an employee:

• becomes a director
• reaches State Pension age
• goes to work abroad
• goes on jury service
• has died
• joins or leaves a contracted-out company pension
• turns 16
• is called up as a reservist
• changes gender

Employee takes a leave of absence

Once your employee has started their leave of absence, put 鈥榊es鈥� in the 鈥業rregular payment pattern indicator鈥� in all FPS reports you send to HMRC until the employee returns.

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 do not 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

You must contact the employer helpline if you pay employees less often so HMRC do not send you a non-filing notice through PAYE Online.

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鈥� (HMRC) Basic PAYE Tools.

Paying your employees more often

If you鈥檝e not already paid your employees, use the new earnings period (in the 鈥楶ay frequency鈥� field) in your Full Payment Submission (FPS) when you next pay them.

If you鈥檝e 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. Do not deduct more National Insurance than would鈥檝e 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 鈥榓nnual scheme鈥�.

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 do not need to send an Employer Payment Summary (EPS) for the months when you do not pay your employees.

To register, contact the employer helpline and tell them which month you pay your employees. You鈥檒l 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鈥檚 later than the month you usually pay your employees, you鈥檒l need to send an EPS for that month to tell HMRC you鈥檙e not paying anyone.

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.