Correcting Payroll Errors using Full Payment Submission (FPS)
If a mistake has been made with an employee’s pay or deductions it can corrected by using your next Full Payment Submission (FPS) to update your year-to-date figures.
Correcting Payroll Errors using an Additional Full Payment Submission (FPS)
An additional FPS can also be sent to correct year-to-date figures providing it is sent before your next FPS is due. In the case of an additional FPS the same pay date should be used.
If an employee has been underpaid you can either send an additional FPS, on or before you pay your employee the additional amount or by the 19th of the tax month after you sent your original FPS. HMRC will include the correction in that month’s PAYE bill.
Correcting errors in an employee’s National Insurance deductions
Both FPS’s and additional FPS’s can be used to correct mistakes to National Insurance deductions.
If an employee has underpaid their national insurance in a particular month, only the equivalent of their following month’s national insurance liability can be taken from them the following month. The remainder must be recovered in another month. Pay any underpayment to HMRC straight away.
Example: Your employee underpaid by €80 in January. In February the employee’s national insurance is €60. This means you can only recover up to €60 towards their underpayment that month. The remainder will need to be recovered the following month.
If the underpayment was in a previous tax year
An Earlier Year Update (EYU) should be sent to HMRC stating the difference between what you originally deducted and the correct amount. The EYU will inform HMRC if you’ve deducted or repaid the difference to the employee. Once more if you have deducted too little you can’t recover more than the National Insurance due that month.
Correcting an employee’s student loan repayments
Both FPS’s and additional FPS’s can be used to correct mistakes once the difference has been repaid or deducted to the employee. Once more if you have deducted too little you can’t recover more than the student loan deductions due that month.
If the mistake was in a previous tax year
If you have deducted too little you do not need to do anything. The employee can contact the Student Loans Company to see how it affects them. If you have deducted too much refund your employee and you can correct your year-to-date figures using an FPS on or before 19th April otherwise use an EYU.