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Correcting payroll mistakes

25 January 2024

Employers use payroll software for pay, deductions, and contributions. Correct mistakes in the next FPS or submit an additional one before the next regular FPS. Different actions apply for National Insurance and student loan repayment mistakes.

Employers generally use payroll software or other payroll services to record employees pay, deductions and National Insurance contributions on or before each payday. They also need to consider other deductions such as pension contributions and student loan payments.

These payments are reported to HMRC in real time using a Full Payment Submission (FPS). This submission contains all relevant information for each employee.

Correct mistakes in employee pay or deductions by updating year-to-date figures in the next regular FPS.

HMRC’s guidance also states that you can correct mistakes by submitting an additional FPS before your next regular FPS is due. You would need to:

  • update the ‘this pay period’ figures with the difference between what you originally reported and the correct figures;
  • correct the year-to-date figures;
  • insert the same payment date as the original FPS;
  • insert the same pay frequency as the original FPS; and
  • insert ‘H – Correction to earlier submission’ in the ‘Late reporting reason’ field.

If you need to correct an employee’s National Insurance deductions the action required will depend on whether the mistake occurred in this tax year or earlier tax years. There are also different actions that may be required to fix a mistake with an employee’s student loan repayments, again depending which tax year the mistake relates to.

If you have any payroll concerns, we would be happy to help.

Source: HM Revenue & Customs Mon, 22 Jan 2024 00:00:00 +0100

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