Running payroll is a complex and intense part of the monthly people management process. There are always moving parts that need to be managed, from SMP, holiday, and leavers through to BiK calculations and adapting to changes in NIC or tax. Sometimes these complexities prevent payroll teams from hitting their deadline for Full Payment Submission (FPS), and this can result in penalties and delays to employees being paid their wages.
This guide looks at the reasons why payroll deadlines dates are missed and what teams can do to rectify the situation.
If you have any issues with payroll deadlines and need advice, guidance, or would like to outsource your Payroll Services, please contact MSP Payroll here.
What payroll deadlines apply?
Payroll teams must meet the following deadlines to ensure they avoid penalties from HMRC. There are deadlines for monthly and annual submissions, plus additional payment summaries which may be required if your payroll circumstances change. These include:
Full Payment Submissions (FPS)
The full payment submission provides HMRC with the full details of your PAYE for that period, including all tax and NIC contributions, and any other additions or deductions for (as examples) Statutory Maternity Pay (SMP), Benefits in Kind (BiK) or Student Loans.
The FPS deadline date for submission is on or before the date employees are paid. This is the most common deadline that’s missed and triggers a penalty if a sound reason for missing the deadline cannot be provided.
Employer Payment Summary (EPS)
The Employer Payment Summary is required when payroll teams are reclaiming statutory payments such as SMP employment allowance or need to report that no wages were made in a particular tax month. The EPS does not replace the FPS.
The EPS must be submitted to HMRC by the 19th day of the following tax month. Missing this deadline can cause issues with payment reimbursement or incur penalties.
Final FPS for the tax year
The final FPS replaced the P35 and includes a “final submission of the tax year” notification for HMRC. The deadline for the final FPS is on or before the last pay day of the tax year. This should be no later than the 5th April.
Employee P60s
The P60 form is the end-of-tax-year certificate, which provides a summary of total pay, tax and NIC for the previous tax year. The P60 is important for employees when applying for mortgages or required to prove income, and means they can check their details are correct with HMRC.
The deadline for issuing employee P60s is May 31st following the end of the previous tax year.
These are the core submissions required by payroll teams; there are several additional, situation-specific, submissions which may be necessary, such as P11ds (although this will eventually be replaced by payroll – see here).
If you need guidance or advice on the submissions required by your payroll team, or you would like to benefit from peace of mind and outsource your payroll services, then please speak to us here.
The most common reasons payroll deadlines are missed
People or capacity
This issue is particularly common in small organisations where it is difficult to find cover when illness or unexpected absence impacts those responsible for monthly payroll. Where knowledge is concentrated in one area or person, deadlines can be impacted when this resource disappears or is temporarily unavailable to the business. Ensuring that training is provided to cover absences in small teams, or outsourcing payroll to a professional services provider who can provide ample cover, can mitigate this issue for many organisations.
Software or data delays
Many organisations rely on sophisticated payroll software to ensure their process are as efficient and accurate as possible. Occasionally, however, software develops glitches that may prevent the digital submission of FPS, such as a breakdown in data transfer between the software and HMRC. The Government Gateway provides email confirmation of an FPS or EPS submission and will notify you immediately if there is an issue. Ensure you have a manual submission process as backup, or customer service support immediately if the software prevents meeting deadlines.
With large or complex employment structures, data can be delivered to the payroll team too late or incomplete, and this may affect the team’s ability to submit an FPS accurately within the deadline. Clear communication with all line management and key stakeholders on the impact of penalties should be implemented to mitigate slow response times.
If you need guidance and support about payroll software or digital FPS submissions, don’t hesitate to get in touch with us here.
End of year and unusual submissions
Completing Payroll and submitting to HMRC is a regular process that becomes part of the monthly routine for most payroll teams. Deadlines are sometimes missed, however, when the submission is an exceptional, unique or irregular one, such as end of year, or annual submissions or where new legislation and changes have come into effect that require new processes.
In these instances, dedicating resources to upcoming changes and legislation, and a strict calendar of necessary actions, will go a long way towards preventing missed deadlines. Working with a professional payroll services provider such as MSP Payroll can also ensure your key changes, unique submissions and annual deadlines are not missed.
The impact of missing payroll deadlines
If your organisation does, unfortunately, miss a payroll deadline, there could be penalties based on the size of your organisation and the circumstances of the missed deadline. There are also practical ramifications for your employees, particularly if it means a payment will be missed, impacting their ability to pay bills and subsistence costs.
Missing HRMC deadlines
HMRC charges defined penalties for missing an FPS or EPS deadline, and these are scaled based on the size of your organisation. Penalties will apply if you don’t send the expected number of FPSs or an EPS if you didn’t pay wages in that period:
What penalties apply for missing payroll deadlines
- 1-9 employees – £100 penalty
- 10-49 employees – £200 penalty
- 50-249 employees – £300 penalty
- 250+ employees – £400 penalty
There are circumstances when HMRC won’t charge a penalty. These include if the FPS is submitted late (but successfully received by HMRC), but the reported payments are within 3 days of the employees’ payday. If this becomes a regular occurrence, your organisation may still be considered for a fine.
If you are a new employer and you send your first FPS within 30 days of paying an employee, then you will not be considered for a penalty. If it is your first failure to meet deadlines, you will also not be considered for a penalty.
Any penalty that is issued can be appealed, and HMRC will consider reasons or extenuating circumstances such as:
- Incorrect data on the return
- IT difficulties (with payroll software, for instance)
- The filing expectation being incorrect (an incorrect payment period for HMRC, for instance)
- Impact on employees, such as death/bereavement or ill health
Correcting or submitting a late FPS
If you miss a payroll deadline or you have submitted incorrect information, then it is possible to provide HMRC with corrections.
For instance, if you need to change payroll payment deadlines or payment periods on your FPS or EPS, then HMRC have provided guidelines about whether to provide the change in the current tax period, or whether to report the corrected figure or time in the next tax period.
If information is incorrect on the FPS or EPS, for instance, the National Insurance category letter or the tax code is incorrect for an employee, then HMRC have provided these steps to advise on how to correct payment information in the current FPS submission, and then account for this change in future FPS submissions.
The date to include for your FPS should always be the date you paid your employees, rather than the date the FPS was created. This is a common error, and HMRC will accommodate these changes, and the reason for the late FPS.
If you require further guidance or expertise on repairing an incorrect or missed FPS, please speak to the MSP Payroll team here.
Communicating with employees about payroll
Payroll is an understandably delicate subject for employees. Many workers base their bill payments around the date of their wage payment, so delays can significantly impact their cash flow and ability to subsist.
Any issue with payroll deadlines should:
- Communicate the reason for the payroll delay and what steps have been implemented to ensure the delay doesn’t happen again
- The impact this may have on payments to the employee’s bank, and when they can expect their wages to be paid
- A clear crisis communications process for any employees who may have questions, or face financial stress/anxiety and need to discuss the issue further
- Brief line managers and provide support where necessary for employees
- Be ready to escalate urgent cases of financial hardship to HR and senior management
Where deadlines have been missed, HR and Payroll teams should freely and clearly communicate. Silence or an inability to reach key members of staff will exacerbate the issue. Always remain factual with information and don’t provide speculation, as this could compound financial issues for employees.
MSP Payroll can help review crisis communications policies for missed or impacted payroll processes. Contact us here.
Where to find external payroll support to ensure you don’t miss payroll deadlines.
MSP Payroll provides professional, accredited payroll services, including:
- Processing new starters, leavers and apprentices accurately
- Ongoing Payroll services for your entire organisation, tailored to your requirements
- Calculating final pay, tax and National Insurance contributions accurately regardless of pension contribution method.
- Providing guidance and consultancy support for ongoing payroll issues
- Reviewing current payroll processes and supporting with compliance and deadlines
- We can ensure your payments to employees are compliant with the latest HMRC and government developments.
Speak to us today to find out more.
Missing Payroll Deadlines: Frequently Asked Questions
Will HMRC automatically fine the organisation for submitting payroll late?
HM Revenue and Customs will not issue penalties if it is the first time the organisation has missed a deadline for tax or National Insurance contributions, or if it is the first time the organisation has paid employees. Any penalty can also be appealed quickly using the HMRC Government Gateway. Late payments will be penalised if this has happened regularly, or if the payment date to employees is more than 3 days from the submission of the FPS.
Can a late or incorrect FPS or EPS submission be corrected?
If a pay date has been missed and a late or incorrect submission has occurred, then organisations can correct their FPS submission either in the current tax period or in the next period, to compensate for the change that is required. HMRC have provided guidance on how to correct FPS submissions here.
Will a late payment impact statutory payments like SMP or SSP?
A late payment can impact maternity leave pay or SSP, but employees do not lose their right to these payments because of a late submission. Employees may experience a late payment, incorrect information with HRMC and employers may see an impact on the time they can reclaim their statutory amount. Correcting the FPS as soon as possible will mitigate any long-term issues for SMP or SSP.
If you need more support or information on missed payroll deadlines and statutory payments, please contact MSP Payroll here.
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