Payroll submission – FPS and EPS
The monthly, or weekly, pay information must be sent to HMRC before the employee’s pay reaches them. The information on salary, wages, taxes and deductions must be with HMRC by the 19th of each month, with PAYE tax payments reaching HMRC by the 22nd of the month. Payslips must be either printed out or electronically passed on to the employees, and must show the total gross wages, tax, NI and other deductions, and the net wages that will be paid to the employee. Other information will vary depending on software used and if the payroll team make custom changes.
Under Real Time Information (RTI), there are up to two types of summaries that can be sent to HMRC. The Full Payment Submission (FPS) is the report which relays the total salary and wages payments to every employee to HMRC for the tax period, and should include information on any new or leaving employees, mentions of any employees beginning a workplace pension payment scheme or if this is the last report of the tax year. The only time that an FPS will not be necessary as a submission is if no employees were paid in the period of the payroll being prepared. An FPS must also be used to show changes to an employee’s status the employee:
• Becomes a director
• Reaches the state pension age, or turns 16
• Must go and work abroad
• Is called on for jury duty
• Joins or leaves a contracted-out company pension
• Changes gender
• Passes awayAn Employer Payment Summary (EPS) would need to be sent to HMRC if no employees were paid during the period, or if the employer is reclaiming parental statutory payments or CIS deductions, to pay the apprenticeship levy, or to claim national insurance contributions holiday for previous years or the employer’s allowance. The claim for the employer’s allowance only needs to be submitted once to HMRC.
The section of the payroll showing wages and salary is also where other payments made to the employee are shown, such as holiday pay, bonus pay, commissions, tips paid through the employer, and so on. Expenses or benefits provided to the employee are not necessary here; these are reported to HMRC at the end of the tax year.
The deductions include tax and national insurance, and they can also cover pension contribution payments, student loan deductions and child maintenance payments. Pension contributions are usually deducted before tax is calculated, but this can vary between pension providers so employers must be sure of what their pension provider rules state. The contribution amount for each employee will need to be input into the payroll software for this to calculate each period. Once deductions are correctly prepared the employer’s NI payments will be calculated. If an FPS and/or EPS are sent to HMRC late the submitter will be given a chance to give a reason for the lateness. In valid circumstances, HMRC will permit the late submission with no follow up. If HMRC deem the reason invalid, or there has been no reason provided, then there will be a penalty. A first offense can lead to a warning initially, but any further times will result in the penalty. Tags:
PAYE, Payroll, setting up a business