Processing payroll transactions and reporting to HMRC
RTI submissions
Payroll data is reported to HMRC through Real Time Information. A Full Payment Submission (FPS) must be sent on or before each payday, showing each employee's pay, tax, NIC, student loan, statutory payments and hours worked. An Employer Payment Summary (EPS) is sent by the 19th of the following tax month to claim statutory recoveries, the Employment Allowance or a NIC holiday, or to declare that no payment is due. If nobody is paid in a period, no FPS is needed, but an EPS may still be required.
Payments and penalties
PAYE, NIC and student loan deductions are due by the 22nd of the following month if paid electronically, or the 19th by post; employers owing under £1,500 a month may pay quarterly. Late filing penalties start at £100 a month, and late payment attracts 5% penalties at 15 and 30 days (and again at 6 and 12 months).
Records and year end
Keep payroll records for 3 years after the end of the tax year. Issue P60s by 31 May, file P11D and P11D(b) by 6 July, and give a leaver a P45. The final FPS of the year must carry the final submission indicator. Automatic enrolment contributions are at least 8% of qualifying earnings, of which at least 3% is employer.
Worked example: a monthly payroll paid on 28 April needs the FPS by 28 April, an EPS claiming statutory recoveries by 19 May, and the PAYE payment by 22 May.
Trap: the FPS deadline is the payday itself, not the 19th, so a late FPS can trigger a penalty even if the tax is paid on time.