Cobolt Media: late FPS, late payment and the Employment Allowance
Cobolt Media Ltd has 12 employees, runs a monthly payroll and pays staff on the last working day of the month. The payroll agent submitted the October 2024 FPS on 4 November 2024; the October pay date was Thursday 31 October 2024. One earlier FPS in the 2024/25 tax year had already been submitted late.
October's PAYE, employee NIC and employer NIC totalled £18,600. The company paid HMRC by electronic transfer on 28 November 2024. It has never claimed the Employment Allowance and now wants to claim it for 2024/25.
The agent has also been told that the director's bonus was overstated on the October FPS.
1. Is the October FPS late, and what penalty arises?
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Yes, it is late. An FPS must be sent on or before the date the employee is paid. The October payment date was 31 October 2024; the FPS went in on 4 November 2024.
Late filing penalty: the amount depends on the number of employees and is charged per tax month in which one or more FPS is late.
- 1–9 employees: £100
- 10–49 employees: £200
- 50–249 employees: £300
- 250+ employees: £400
Cobolt has 12 employees, so the penalty is £200. An earlier FPS in the same tax year was also late, so the October default is not a first default and the penalty stands.
Practical points:
- The penalty is based on the number of employees on the payroll at the time of the default, not the number in the FPS.
- Even though the FPS was late, it must still be sent with the correct payment date and correct year-to-date figures - it is not replaced by the next month's submission.
- Persistent failure to file can lead to HMRC charging penalties for each month, so the agent should fix the deadline process rather than simply absorb the £200.
2. When was the October PAYE payment due, and what late payment penalty applies?
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Due date. Electronic payments must reach HMRC by the 22nd of the following month: 22 November 2024. Payment on 28 November 2024 is therefore 6 days late.
Late payment penalties for PAYE:
- 1–6 days late: 1% of the unpaid amount
- 7–14 days late: a further 2% (3% in total)
- 15 days or more: a further 3% (4% in total)
- plus 5% if still unpaid at 6 months and at 12 months
At 6 days late the penalty is 1% × £18,600 = £186, and interest also runs from the due date until payment.
Monthly, not quarterly. A small employer may pay quarterly only if its average monthly liability is below £1,500. At £18,600 a month, Cobolt must pay monthly.
Note the payment deadline is not the same as the FPS deadline (payment date) or the EPS deadline (19th of the following month). Three different dates apply to the same pay run.
3. How should the company claim the Employment Allowance, and how should the overstated bonus on the October FPS be corrected?
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Employment Allowance
- The allowance for 2024/25 is £5,000 off the employer's NIC bill. The £100,000 secondary-threshold restriction was removed from 6 April 2024, so Cobolt qualifies.
- It is claimed by sending an EPS; the claim can be made at any point in the tax year, and the allowance reduces the next PAYE payment due.
- The EPS for October is due by 19 November 2024. Any unused allowance is lost once the tax year ends, so a claim should be made promptly rather than waiting until March.
- The allowance is per employer, not per employee, and it cannot reduce the employee's own NIC or PAYE.
Correcting the FPS
You cannot amend or resubmit the original FPS. The correct approach is to send an additional FPS for the same pay period showing the correct year-to-date figures for the affected director and for the payroll as a whole. HMRC treats the latest year-to-date figures as correct. If the correction changes the amount of PAYE due, the difference is settled with the next monthly payment or claimed back.
Both the EPS and any additional FPS form part of the payroll records, which must be kept for three years after the end of the tax year to which they relate.