If your company is registered as an employer, you will need to report certain salary details to HMRC via Pay As You Earn (PAYE) every time you pay your employees and executives. This electronic reporting system, introduced in 2013, is known as Real Time Information (RTI). As the name suggests, it reports salary information to HMRC in (almost) real-time.
In the UK, employers are required to report their payroll information to HM Revenue & Customs (HMRC) on a regular basis. This includes reporting details about their employees' salaries, tax deductions, and National Insurance contributions. In this article, we will take a closer look at the reporting process, including Full Pay Submission (FPS) and Employer Payment Summary (EPS), and why it is important for employers to comply with these requirements.
There are two main types of documents that you (or your accountant) must submit to HMRC through the payroll program:
What is Full Pay Submission (FPS)?
Full Pay Submission (FPS) is a process that employers use to report their payroll information to HMRC. This includes details about their employees' salaries, tax deductions, and National Insurance contributions. The FPS process is usually carried out on a monthly basis, and employers must submit their reports by the 19th of the following month.
The FPS process is designed to ensure that employers are complying with their tax and National Insurance obligations, and that their employees' tax payments are being calculated correctly. By reporting their payroll information on a regular basis, employers can help to avoid penalties and fines from HMRC.
Every payday, you must report your employees' wages, taxable benefits, and deductions for FPS.
Use the Payroll software to submit a "full payment submission" (FPS) to notify HMRC of payments made to your employees and deductions you've made. Include everyone you pay, even if they earn less than £123 a week.
When Do You Send Your FPS
Enter FPS before your employees' payday, even if you pay HMRC quarterly instead of monthly. You must enter the normal date on which you pay your employees, even if you pay them late or early. For example, if you pay your employees upfront because the normal payday falls on vacation, you still have to enter the normal payday.
Complete and Submit An FPS
You will need to enter the PAYE reference and the accounting reference into your software. Sent to you by HMRC after you have registered as an employer. HMRC provides guidance on what to include in each area of ​​SPF, including:
1. Employer information
2. Employee Information - Include only paid employees
3. Wages and discounts
4. National Insurance Information
You can split your FPS into shares if that's easier for you, one for the team and one for the managers. Special rules for calculating deductions apply if your employee has more than one job with you.
What should be included in a fully paid (FPS) summary?
Full Payment Filing (FPS) is an RTI document that you must fill out whenever you pay your employees weekly, fortnightly, quarterly or monthly. Thus, if employees and managers are paid weekly, 52 fully paid items will be sent; If monthly, 12 will be broadcast all year round; Etc.
Full Payments will provide HMRC with the following information:
Employer Registration Data: Employer's PAYE reference and billing reference
Employee information (including company administrators): name, address, date of birth, social security number, class, social security number, student loan status, regular weekly working hours, and payment frequency
Salary and deductions for each employee: gross salary, pension contributions, personal income tax and social security deductions, employer social security contributions, student loan instalments, statutory salaries (e.g. maternity, paternity, sick pay), payment date, and year in which year. date numbers
Entries and exits: details of all employees who have entered or left the company since their last pay period, including entry/exit dates
Changes to Employee Personal or Professional Information
These submissions ensure that HMRC maintains accurate and up-to-date records of your employees, their salaries, deductions, and payments that you are required to make.
How to Submit Full Pay Submission (FPS) in the UK in 2023- A Step-by-Step Guide
Understanding Full Pay Submission (FPS)
Full Pay Submission (FPS) is a vital component of payroll processing under the UK's PAYE (Pay As You Earn) system. It involves reporting to HM Revenue & Customs (HMRC) the details of payments and deductions for every employee when they are paid. As we step into 2023, staying updated with the latest guidelines for submitting FPS is crucial for every business.
Step 1: Ensure Registration with HMRC
Before you begin the FPS process, ensure that your business is registered with HMRC for PAYE. Registration can be done online through the HMRC website. Once registered, you'll receive your PAYE reference number and Accounts Office reference number, essential for the FPS process.
Step 2: Payroll Software Selection
The next step is selecting appropriate payroll software. In 2023, the market offers a variety of software options compatible with HMRC's requirements. Choose one that suits your business size and needs. The software should be capable of running payroll, calculating PAYE taxes, National Insurance contributions, and other deductions accurately.
Step 3: Collect and Update Employee Information
Gather accurate and updated information for each employee, including their name, National Insurance number, tax code, and payroll ID. This data is critical for error-free FPS submission. New hires and changes in employee details should be updated promptly in the payroll system.
Step 4: Running Payroll
Run your payroll using the chosen software. Calculate the gross pay, apply necessary deductions, and determine the net pay for each employee. The software should automatically generate FPS data during this process.
Step 5: Submitting FPS
After running payroll, submit the FPS to HMRC. This should be done on or before the employees' payday. The payroll software typically offers a 'Submit FPS' option, which sends the data directly to HMRC. Ensure your internet connection is stable during submission to avoid any transmission errors.
Step 6: Post-Submission Checks
Once submitted, check for any HMRC notifications or errors reported. If HMRC identifies any issues with your FPS, address them promptly. Timely correction of errors is vital to maintain compliance and avoid penalties.
Step 7: Record Keeping
Maintain records of all FPS submissions, including dates, amounts, and employee details. These records are essential for future reference and in case of any discrepancies or HMRC audits.
Step 8: Dealing with Amendments
If you need to make amendments after submitting FPS, use the payroll software to make corrections. These corrections are typically submitted through the next FPS. However, ensure that the amendments adhere to HMRC guidelines.
Step 9: Year-End Reporting
At the end of the tax year, complete the year-end reporting. This includes submitting the final FPS for the year and issuing P60 forms to employees. The year-end process is crucial for closing the annual PAYE records accurately.
Best Practices for FPS Submission
Stay updated with HMRC guidelines and payroll legislation changes.
Regularly back up your payroll data.
Ensure accuracy in employee data and payroll calculations.
Utilize the support and guidance offered by your payroll software provider.
Submitting Full Pay Submission in the UK in 2023 requires meticulous attention to detail and adherence to HMRC's guidelines. By following these steps and best practices, businesses can ensure smooth and compliant payroll processing. Remember, keeping abreast of legislative changes and using reliable payroll software are key to successful FPS submission.
Which Software Can Be Used to Report Payroll to HMRC through Full Pay Submission (FPS)
In 2023, businesses in the UK have a variety of software options for reporting payroll to HMRC through Full Pay Submission (FPS). These software solutions are designed to streamline payroll processes, ensure compliance with HMRC regulations, and simplify the reporting of employee payments and deductions. Here's an overview of some of the leading payroll software options available in the UK for 2023.
1. HMRC Recognised Software
The UK government's HMRC website lists both free and paid-for software recognised for reporting PAYE information online. The HMRC does not recommend one product over another but provides a comprehensive list for businesses to choose from based on their specific needs​​.
Free Payroll Software Options:
ANNA Free PayRoll
Free Cloud Payroll
1st FREE Payroll & HR
Primo Payroll with Auto Enrolment (up to 10 employees)
Capium Payroll (up to 3 employees)
Basic PAYE Tools
IRIS Payroll Basics
These options are particularly beneficial for small businesses with fewer than 10 employees, offering basic payroll functionalities and compliance with HMRC requirements​​.
Paid-for Payroll Software Options:
RTI E-FILING Specialist and Professional
Payroll Bureau, Payroll Elite, and various Payroll solutions from Able Internet Payroll Ltd
Accentra Payroll (Desktop), Primo Payroll (Cloud)
Acting Office – Payroll
OpenPeople, Advanced Payroll
Brain Payroll
BrightPay
Dayforce
These paid solutions often offer more advanced features, suitable for larger businesses or those with more complex payroll requirements​​.
2. Popular Payroll Software Solutions
Several payroll software solutions have gained popularity due to their comprehensive features, ease of use, and compliance with HMRC regulations.
QuickBooks Payroll: Known for its user-friendly interface and integration with QuickBooks' accounting software.
Workday HCM: A comprehensive solution that combines human capital management with payroll functionalities.
Xero: Offers a seamless payroll process and is particularly favored for its cloud-based functionality.
Dayforce HCM: Provides a unified platform for workforce management, including payroll​​.
Sage Business Cloud Payroll: A popular choice among small businesses, offering easy management of payroll for up to 100 employees and full HMRC compatibility​​.
BrightPay: Recognized as the best desktop-based software for UK employers, offering secure, HMRC-compliant payroll solutions​​.
Moneysoft: Known for providing good value for money with features like HMRC and RTI compliance, automatic enrolment, and flexible payslips​​.
Key Considerations When Choosing Payroll Software
When selecting payroll software, businesses should consider several factors to ensure they choose a solution that best fits their needs:
Size of the Business: Smaller businesses may benefit from free software options or solutions designed for fewer employees, while larger businesses may require more robust paid solutions.
Compliance with HMRC Requirements: It's crucial to choose software that complies with HMRC regulations for Full Pay Submission.
Features Required: Consider the specific payroll features needed, such as automatic enrolment, holiday pay, flexible payslip generation, and reporting capabilities.
Integration with Other Systems: Software that integrates with existing accounting or HR systems can provide added efficiency.
Support and Training: Look for options that offer customer support and training resources to ensure smooth implementation and ongoing use.
In conclusion, the best payroll software for a UK business in 2023 will depend on the specific needs and size of the business. The options range from free software for smaller businesses to more comprehensive solutions for larger organizations, all ensuring compliance with HMRC's Full Pay Submission requirements.
The Importance of Timely FPS Submission
While the content from your provided URL mainly focuses on the basics of reporting payroll to HMRC, it doesn't delve into the significance of timely FPS submissions. According to Shape Payroll, failing to send the FPS on or before the contractual payment day can lead to penalties from HMRC. This is crucial for businesses to understand, as late submissions can result in unnecessary financial burdens.
Reporting Payments Made Early
Another aspect not covered in your initial URL is the protocol for reporting payments made early, especially during holidays like Christmas. Shape Payroll advises that if you pay your employees earlier than the contractual pay date, you must still report the normal payment date on the FPS. For instance, if you pay on the 17th of December but your regular pay date is the 31st, the FPS should reflect the 31st as the payment date. This is important for maintaining your employees' eligibility for Universal Credit.
Confirmation and Troubleshooting
After submitting an FPS, it's essential to know whether it has been successfully received by HMRC. Shape Payroll mentions that you will see "Accepted" in the status field along with a time and date stamp if your FPS has been successfully received. You should also receive an email confirmation from HMRC. If the status shows "failed," it's likely due to an authentication error, and you should consult HMRC's RTI Errors guide for possible solutions.
Viewing Your Submissions
Your FPS submissions can be viewed in your HMRC account, but they show up at different times depending on when you submit them. According to Shape Payroll, if you make an FPS on time, your balance will be updated by the 12th of the next month. If you make a late FPS, different rules apply, and you should consult the GOV.UK guide on payroll for more details.
New Employees and Employee Changes
Shape Payroll highlights that FPS is not just about payments and deductions; it also includes other types of information. For example, if you have a new employee or an employee leaves, this information needs to be included in the FPS. The same goes for other changes like starting to pay a workplace pension or an employee changing their address.
Special Circumstances: Universal Credit
One of the unique points raised by Shape Payroll is the impact of FPS on Universal Credit eligibility. Reporting payments early could affect an employee's further entitlements to Universal Credit. This is a crucial point for employers to understand, as it directly impacts the financial well-being of their employees.
HMRC RTI Errors
Shape Payroll provides a section on HMRC RTI Errors, which can be a valuable resource for troubleshooting FPS issues. If your FPS status shows "failed," the most common reason is an authentication error. Knowing where to find solutions for these errors can save you time and potential penalties.
Employer Payment Summary (EPS)
While FPS is critical, Employer Payment Summary (EPS) also plays a role in your interactions with HMRC. If HMRC receives an EPS between the 20th and the 5th of the month, your balance will be updated by the 12th of the next month. This is important to note because it affects how you manage your payroll and financial records.
What is Employer Payment Summary (EPS)?
Employer Payment Summary (EPS) is a process that employers use to report any adjustments to their payroll information that have occurred during the month. This includes details about any statutory payments, such as sick pay or maternity pay, that have been made to employees.
The EPS process is also carried out on a monthly basis, and employers must submit their reports by the 19th of the following month. By reporting any adjustments to their payroll information, employers can ensure that their employees' tax and National Insurance contributions are being calculated correctly.
The Employer Payment Summary (EPS) is a submission that you can use to report values to HMRC that you cannot include in your completed payment submission (EPS). These values will affect payments made to HMRC on a monthly or quarterly basis.
You must submit the EPS by the 19th of the following fiscal month if you are applying for refunds or benefits, or if you need to provide specific dates. You must also submit an EPS to notify HMRC that you are claiming the work allowance. You can do this directly in your Company Settings once you have checked the Eligibility for Work Assistance checkbox.
There are many cases where you send EPS. You may need to adjust your payment to HMRC as you need to collect legal payments and related NI compensation. It may also be necessary to inform HMRC that payment is not due for that month, for previous months, or future months.
By the 22nd of each month, HMRC must pay the deductions reported in your FPS in the previous fiscal month, less any deductions required by the EPS you provided in the current fiscal month.
What to include in an Employer Payments Summary (EPS)
In addition to your regular full payment statements, you must also submit an Employer Payment Summary (EPS) to report any adjustments to your salary obligations.
You must submit the EPS (through your payroll software) if you have to:
Tell HMRC that no payments have been made to staff in a full financial month
Reimbursement of statutory payments to employees
Claim the Employment Allowance
Pay a job levy
Claim back deductions made for Construction Industry Scheme (CIS)
Declare that no employees will be paid in a future fiscal month
Let HMRC know that you have made your final FPS
Inform HMRC that your PAYE program has ended
If you need to submit the EPS, you need to submit it to HMRC by the 19th day of the next fiscal month to ensure the rebates are applied to your invoice in good time.
After submitting your EPS, you can see what you have claimed and what you owe to HMRC in your HMRC online account. This information is generally available within two days or before the 14th of the month if the EPS was sent before the 11th.
The Role of EPS in Claiming Employment Allowance
Your initial URL doesn't delve into the role of EPS in claiming Employment Allowance. According to Sage, the EPS is crucial for claiming allowances such as Employment Allowance. You need to send an EPS instead of a Full Payment Submission (FPS) to claim this allowance. This is vital for small businesses looking to reduce their National Insurance contributions.
EPS for Seasonal Workers
Another aspect not covered is the use of EPS for seasonal workers. According to Shape Payroll, if you employ seasonal workers and don't pay them every month, you can use EPS to inform HMRC that no payment is due for a specific period. This ensures you won't receive unnecessary reminders or penalties from HMRC.
Correcting Errors with EPS
BrightPay emphasizes that EPS can be used to correct errors in previous submissions. If you've made an error in your FPS, you can use EPS to correct it. This is particularly useful for businesses that have complex pay structures and are prone to making errors.
EPS and SMP Recovery
Shape Payroll mentions that EPS is used to recover Statutory Maternity Pay (SMP). If your business is eligible to recover SMP, you need to include this information in your EPS. This is crucial for businesses to manage their cash flow effectively.
The Timing of EPS Submissions
According to GOV.UK, the timing of your EPS submissions can impact your PAYE bill. If HMRC receives your EPS between the 20th of the current month and the 19th of the following month, it will reduce your PAYE bill for the following month. Understanding this can help businesses manage their finances more effectively.
EPS for CIS Deductions
Shape Payroll highlights that EPS is also used to report Construction Industry Scheme (CIS) deductions suffered. This is particularly relevant for businesses in the construction sector. Reporting these deductions correctly can help you reduce your PAYE bill.
EPS and Apprenticeship Levy
According to Sage, if your business pays the Apprenticeship Levy, this information should be included in your EPS. This is crucial for compliance and ensuring that you're contributing to the development of new talent in your industry.
Record-Keeping for EPS
BrightPay advises that you should keep records of all EPS submissions for at least three years. This is not only good practice but also a requirement by HMRC. Failure to keep these records can result in penalties.
EPS and Discrepancies
GOV.UK mentions that if there's a discrepancy between the amount you report and the amount HMRC expects, you'll be contacted by HMRC. It's crucial to resolve these discrepancies promptly to avoid penalties. You may need to submit an additional EPS to correct the information.
EPS and Payment Plans
According to Papaya Global, if you've arranged a payment plan with HMRC, you should not send an EPS. Instead, you should follow the terms of your payment plan. This is crucial for businesses facing financial difficulties and have negotiated special arrangements with HMRC.
Why is it Important to Report Payroll Information to HMRC?
Reporting payroll information to HMRC is important for several reasons. Firstly, it ensures that employers are complying with their tax and National Insurance obligations. By reporting their payroll information on a regular basis, employers can help to avoid penalties and fines from HMRC.
Secondly, it ensures that employees' tax payments are being calculated correctly. By reporting their payroll information to HMRC, employers can ensure that their employees are paying the correct amount of tax and National Insurance contributions.
Finally, reporting payroll information to HMRC helps to ensure that the UK's tax system is operating effectively. By collecting data about payroll information, HMRC can identify trends and patterns that can help to inform future tax policy decisions.
How to Report Payroll Information to HMRC
Reporting payroll information to HMRC can be done through a variety of channels, including online, by phone, or by post. Most employers choose to report their payroll information online, using HMRC's PAYE Online service.
To use the PAYE Online service, employers must first register with HMRC and set up an online account. They can then use the service to submit their Full Pay Submission (FPS) and Employer Payment Summary (EPS) reports.
How a Tax Accountant Can Assist in Reporting Payroll Information to HMRC
Expertise in Payroll Legislation
One of the most significant ways a tax accountant can assist you is by providing in-depth knowledge of current payroll legislation. HMRC frequently updates its guidelines, and staying compliant can be a challenge. A tax accountant will keep abreast of these changes and ensure that your payroll reporting adheres to the latest regulations.
Accurate Calculations
Payroll involves various calculations, from basic salary to complex deductions and allowances. A small error can lead to significant issues, including penalties from HMRC. A tax accountant uses specialized software and expertise to ensure that all calculations are accurate, reducing the risk of errors.
Timely Submissions
HMRC has strict deadlines for payroll reporting, including Full Payment Submissions (FPS) and Employer Payment Summaries (EPS). Missing these deadlines can result in fines and complications. A tax accountant will manage these deadlines, ensuring timely submissions and even automating the process where possible.
Handling Special Cases
If your business has unique payroll needs, such as seasonal workers, a tax accountant can handle these special cases. They know how to report zero payments or claim Employment Allowance, ensuring that your payroll reporting is accurate and tailored to your business needs.
Navigating Furlough and Grants
During unprecedented times like the COVID-19 pandemic, various grants and furlough schemes are available for businesses. A tax accountant can guide you through the complexities of these schemes, ensuring that you claim all the benefits you're entitled to and report them correctly to HMRC.
Confidentiality and Data Protection
Payroll information is sensitive and must be handled with the utmost confidentiality. A tax accountant adheres to strict data protection laws, ensuring that your employees' information is secure. This is particularly important as GDPR regulations require stringent data protection measures.
Assistance in Audits
If HMRC decides to audit your business, having a tax accountant by your side can be invaluable. They can provide all the necessary payroll documentation in the required format, answer any questions the auditors may have, and act as a liaison between you and HMRC, making the process less stressful.
Resolving Discrepancies
Should there be any discrepancies in your payroll reporting, a tax accountant can act swiftly to resolve the issue. Whether it's an internal error or a query from HMRC, your accountant can investigate, correct the mistake, and communicate with HMRC to resolve the issue.
Strategic Planning
Beyond the routine tasks, a tax accountant can offer strategic advice to optimize your payroll process. Whether it's advising on tax-efficient salary structures or planning for the end of the tax year, their expertise can save your business time and money in the long run.
Employee Queries
Employees often have questions about their payslips, tax codes, and other payroll-related issues. A tax accountant can handle these queries professionally, freeing up your time to focus on other aspects of your business.
By hiring a tax accountant to manage your payroll reporting to HMRC, you're not just outsourcing a task; you're gaining a partner who can navigate the complexities of tax law, meet deadlines, and ultimately save you time and money.
Conclusion
In conclusion, reporting payroll information to HMRC is an important requirement for employers in the UK. By submitting their Full Pay Submission (FPS) and Employer Payment Summary (EPS) reports, employers can ensure that they are complying with their tax and National Insurance obligations, that their employees' tax payments are being calculated correctly, and that the UK's tax system is operating effectively. By using HMRC's PAYE Online service, employers can submit their reports quickly and easily, and help to avoid penalties and fines from HMRC.
20 FAQs about "Reporting Payroll to HMRC through Full Pay Submission (FPS)
1. Q: What is the deadline for submitting a Full Pay Submission (FPS) if payday falls on a weekend or public holiday?
A: If your usual payday falls on a weekend or public holiday, you should submit the FPS on the last working day before the usual payday.
2. Q: How do I handle FPS submissions for employees on unpaid leave?
A: For employees on unpaid leave, you need to update their employment status in the payroll software, and this should reflect in the FPS submission with £0 payment.
3. Q: Can I submit FPS for an employee with variable pay each month?
A: Yes, FPS must be submitted each month regardless of any variations in pay. The submission should reflect the actual amount paid for that period.
4. Q: What if I make a mistake in the FPS submission?
A: If you make an error, you should correct it in your next FPS submission by providing the corrected information for the employee.
5. Q: Is it necessary to submit FPS for employees who haven't worked but are still on the payroll?
A: Yes, you must submit an FPS for all employees on the payroll, even if they haven't worked in the pay period.
6. Q: How do I submit FPS for a new employee who doesn't have a National Insurance number yet?
A: You should submit FPS with the available details and update it once the National Insurance number is obtained.
7. Q: What are the consequences of not submitting FPS on time?
A: Late FPS submissions can lead to penalties and fines from HMRC, as well as potential issues with employees' tax records.
8. Q: Can I submit FPS for an entire financial year in advance?
A: No, FPS must be submitted in real-time, i.e., every time employees are paid, to reflect accurate and current payment information.
9. Q: Is it possible to submit FPS manually without using payroll software?
A: FPS submissions are typically done using payroll software that is compatible with HMRC's Real Time Information (RTI) system for accuracy and efficiency.
10. Q: How do I handle FPS submissions for employees with multiple employment roles within the same company?
A: You need to include all employment roles and corresponding payment details for such employees in the FPS submissions.
11. Q: What information is required for an employee's first FPS submission?
A: The first FPS submission for an employee should include their personal details, tax code, National Insurance number, and payment information.
12. Q: How do I submit FPS for part-time employees?
A: FPS for part-time employees should be submitted in the same way as for full-time employees, reflecting their actual hours worked and pay received.
13. Q: Can I amend the FPS after it has been submitted?
A: Yes, amendments can be made in the next FPS submission, where you need to correct the information previously reported.
14. Q: What should I do if I accidentally submit duplicate FPS entries?
A: If you submit a duplicate FPS, you should contact HMRC as soon as possible to rectify the situation and prevent any payroll discrepancies.
15. Q: How does FPS submission affect an employee's tax code?
A: FPS submissions provide HMRC with real-time earnings information, which can influence any changes in an employee's tax code.
16. Q: Are there any specific FPS submission guidelines for employees under the Construction Industry Scheme (CIS)?
A: For CIS employees, FPS submissions should include details of any deductions made under the scheme in addition to regular payroll information.
17. Q: How do I handle FPS submissions for employees receiving statutory payments like maternity or sick pay?
A: You should include any statutory payments in the FPS submissions, indicating the type and amount of payment alongside regular salary details.
18. Q: What happens if there's a discrepancy in the FPS submission? A: If there's a discrepancy in your FPS submission, HMRC may contact you for clarification or correction to ensure accurate employee tax records.
19. Q: Do I need to submit FPS for employees who earn below the tax threshold?
A: Yes, FPS submissions are required for all employees, regardless of whether they earn above or below the tax threshold.
20. Q: How do I confirm that my FPS submission has been successfully received by HMRC?
A: After submitting FPS, you should receive a confirmation from your payroll software and can also check the submission status in your HMRC online account.