Handling payroll in the UK means keeping up with HMRC’s Real Time Information rules, and at the heart of it is the Full Payment Submission (FPS). Every time you pay your employees, you’re required to submit an FPS detailing pay, tax, and National Insurance. Miss a deadline or get the details wrong, and you could face penalties or compliance issues. It’s a common headache for employers and payroll teams alike.
This guide breaks down FPS HMRC in plain terms: what it is, why it matters, and how to get it right every time. Read on to stay compliant, avoid costly mistakes, and take the guesswork out of payroll reporting.
What is FPS in HMRC Payroll Reporting?
A Full Payment Submission (FPS) is a key report that employers must send to His Majesty’s Revenue and Customs (HMRC) every time they pay their employees. It forms part of the Real Time Information (RTI) system, which ensures HMRC always has up-to-date payroll data.
The FPS includes important details such as employee names, National Insurance numbers, payment dates, taxable earnings, deductions (like Income Tax and National Insurance), and any student loan repayments. Whether you run payroll weekly, monthly, or on another schedule, an FPS must be submitted each time employees are paid.
Submission is done through HMRC-recognised payroll software and must be completed on or before the day you pay your employees. It doesn’t matter how much an employee earns, even if they’re paid less than £123 per week (the current Lower Earnings Limit), they must still be included in the FPS.
What are the Key Information Included in an FPS?
A Full Payment Submission (FPS) is a comprehensive report sent to HMRC every time you pay your employees. To ensure accuracy and compliance, it must include detailed information covering several important areas like:
1. Employer Details
- PAYE reference number: This is a unique identifier assigned to your business when you register as an employer with HMRC. It ensures that all payments and submissions are correctly linked to your business account.
- Accounts Office reference: This identifies the office where your PAYE payments are processed. It’s important to include this so HMRC knows where to allocate your payments.
2. Employee Details
- Full name: The employee’s legal name as recorded with HMRC. Using the correct name avoids confusion and helps HMRC match records correctly.
- National Insurance (NI) number: This unique identifier is essential for linking payroll submissions to the right individual’s tax and NI records. It must be accurate to prevent misallocation of contributions or tax.
- Tax code: The employee’s tax code determines how much Income Tax should be deducted from their pay. Providing the correct code is crucial for accurate tax calculations.
3. Payment Information
- Gross pay: The total amount paid to the employee before any deductions. This includes basic salary, bonuses, commissions, and any other taxable earnings.
- Deductions: This covers statutory deductions such as Income Tax, National Insurance contributions (both employee and employer portions), student loan repayments, and any other authorised deductions. Correctly reporting these ensures proper calculation of tax liabilities.
- Net pay: The actual amount the employee receives after all deductions. This figure is important for record-keeping and reconciliations.
4. Other Relevant Data
- Starter or leaver information: If the employee has recently joined or left your business, this must be reported to HMRC. It ensures that employee records are kept up to date, which affects tax codes and National Insurance contributions.
- Irregular payment indicators: This includes information about any atypical payments, such as bonuses, expense reimbursements, or adjustments to previous payments. Flagging these helps HMRC process payments correctly and prevents errors.
Also Read: Make Every Submission Count with Simplified FPS Payroll.
When and How to Submit an FPS?
Submitting your Full Payment Submission (FPS) accurately and on time is essential for staying compliant with HMRC’s Real Time Information (RTI) requirements. This section walks you through when to submit your FPS, how to do it properly, and what to consider in special cases.
Timing Requirements
- Deadline: You must submit the FPS to HMRC on or before the day you pay your employees. This applies to all payroll frequencies—whether weekly, monthly, or irregular payments like bonuses. Missing this deadline could lead to penalties.
- Early payments: If a payment is made early, such as before a bank holiday or weekend, you still need to report the original contractual payday in your FPS. This helps HMRC align tax and benefit data correctly.
- Late submissions: HMRC may allow late FPS submissions in specific cases (e.g., payroll software crashes or system failures), but you must provide a valid reason. Unjustified delays can result in penalties, which vary depending on the number of employees in your PAYE scheme.
- Benefit impact: Using the wrong payday in your FPS can affect employees claiming Universal Credit. For example, an incorrect date may make it appear that the employee was paid twice in one period, which can reduce or delay their benefit payments.
How to Submit Your FPS?
- Payroll software: Most employers use HMRC-recognised payroll software to file FPS. It’s the fastest and most reliable method, offering step-by-step support and automatic error-checking features to help you stay compliant.
- Basic PAYE Tools: HMRC provides this free tool for smaller employers. While it covers the essentials, it doesn’t offer as many features or efficiencies as commercial software and may be better suited to simpler payroll setups.
- Manual online submissions: You can also file your FPS through HMRC’s online portal, though this method is less intuitive and carries a higher risk of manual errors. It’s typically used by very small employers or in special cases.
- Key checks: Regardless of the method, you should always double-check critical details like employee names, National Insurance numbers, tax codes, and payment dates. Mistakes in these areas can lead to fines or incorrect tax processing.
Special Circumstances
- New starters and leavers: Make sure to update payroll records immediately when employees join or leave your business. Your FPS must include accurate starter or leaver details so HMRC’s records remain current.
- Absences: During periods such as maternity leave, paternity leave, or sick leave, you must report correct pay amounts and statutory deductions (such as Statutory Maternity Pay). Use appropriate indicators in your FPS to reflect these situations.
- Payment dates: Always ensure that the payment date in your FPS matches the actual contractual payday, especially during bank holidays or early payments. This helps avoid errors in employee tax and benefit calculations.
What are the Common Mistakes to Avoid with FPS Submissions?
Even with good payroll systems in place, employers can still fall into common traps when submitting Full Payment Submissions (FPS) to HMRC. These mistakes can lead to compliance issues, penalties, and even disruptions to employee benefits like Universal Credit. Here’s what to watch out for:
1. Late Submissions
Your FPS must be submitted on or before the pay date, and not after. Missing this deadline, even by a day, can trigger penalties unless you have a valid excuse, such as a payroll system failure or unexpected outage.
Set automated reminders tied to each tax month to ensure FPS submissions are never delayed, even around bank holidays or seasonal pay adjustments.
2. Incorrect or Incomplete Employee Information
Errors in key employee details, such as date of birth, National Insurance number, or tax code, can result in rejected submissions or miscalculated tax contributions. These issues may also delay HMRC processing or disrupt Universal Credit for your employees.
Always verify each employee’s personal data and use payroll software with built-in validation to catch mistakes early.
3. Failure to Report New Starters or Leavers Correctly
Not reporting a new employee or failing to indicate when an employee leaves means your FPS data won’t accurately reflect your workforce. This can cause tax miscalculations and raise compliance issues.
Use the starter checklist for new employees and apply the correct leaver indicator when someone exits your business, and both should be included in the FPS for the relevant tax month.
4. Misreporting the Pay Date
When you pay employees early, such as at Christmas or due to a bank holiday, it’s a common mistake to enter the actual payment date instead of the agreed contractual pay date. This can affect employees receiving Universal Credit, as it may look like they were paid twice in one tax month.
Always use the official pay date outlined in your contracts, even if the money is transferred earlier.
5. Overlooking Tax Year Transitions
The shift from one tax year to the next (starting 6 April) is another area prone to errors. If changes to employee data, pay structures, or tax codes aren’t updated before your first FPS of the new year, your submission may be flagged.
Review all records and payroll settings ahead of the new tax year to ensure everything is up to date before your first April submission.
What are the Penalties and Consequences of Late or Incorrect FPS Submissions?
Penalties and consequences of late or incorrect FPS submissions can have serious financial and operational impacts on your business. HMRC takes timely and accurate payroll reporting very seriously, and failing to meet these obligations can lead to fines, increased scrutiny, and complications for both your company and your employees.
HMRC Penalty Structure Based on Company Size
HMRC charges penalties for late or missing FPS submissions, which vary depending on your PAYE scheme size:
- 1 to 9 employees: £100 per month
- 10 to 49 employees: £200 per month
- 50 to 249 employees: £300 per month
- 250 or more employees: £400 per month
Repeated late submissions or errors can lead to increased penalties from HMRC, daily interest being charged on any unpaid fines, and a higher risk of audits and reputational damage. These consequences can quickly add up and significantly increase the financial burden on your business.
How to Fix Errors in FPS Submissions?
If you discover mistakes in an FPS report, it’s important to act quickly. To correct errors effectively:
- Submit an amended FPS as soon as possible using your payroll software to update the information.
- Clearly reference the original submission to help HMRC easily identify and process the correction.
- Ensure all corrected details are accurate and complete to avoid further issues.
- Keep a record of the amended submission for your own payroll tracking and future reference.
Best Practices for Compliance with HMRC FPS Requirements
Staying compliant with HMRC’s Full Payment Submission (FPS) rules isn’t just about ticking boxes—it’s about setting up a streamlined, reliable payroll system. With the right tools and habits, you can avoid penalties, reduce errors, and ensure every submission is timely and accurate. Here’s how to do it right.
1. Use Reliable Payroll Software
Choosing a HMRC-recognised payroll software like Direct Payroll Services is one of the most effective ways to simplify your FPS process. A good system automates calculations, flags errors, and ensures timely submissions. Features like real-time validation and compliance checks help avoid mistakes in employee data, payment dates, and deductions, keeping you audit-ready.
2. Provide Regular Training for Payroll Staff
Well-trained payroll staff are key to staying compliant. They should understand RTI rules, know how to handle starters and leavers, and keep up with changing FPS requirements. Regular training helps reduce errors and keeps your team agile when HMRC guidance changes.
3. Conduct Periodic Payroll Audits
Routine audits catch issues early. Check employee records, tax codes, pay dates, and NI contributions regularly. This helps ensure your payroll data reflects reality and keeps your records accurate for new starters and leavers alike.
4. Stay Updated With Payroll Legislation
HMRC rules evolve often. Subscribe to updates, attend webinars, or consult a payroll adviser to stay informed. Keeping up with changes ensures your systems and staff remain compliant year-round.
Make FPS Reporting Effortless with Direct Payroll Services
Navigating HMRC’s FPS requirements doesn’t have to be complicated. At Direct Payroll Services, we simplify the process with HMRC-recognised payroll software and expert support tailored to your business. From accurate real-time reporting to timely submissions and compliance checks, our solutions are designed to keep your payroll running smoothly, week after week, month after month.
Whether you’re a small business or a growing enterprise, trust Direct Payroll Services to take the hassle out of payroll reporting and help you stay on the right side of HMRC. Contact us today!
Final take: Keep Your Payroll on Point
Getting your Full Payment Submissions (FPS) right is essential for running a smooth and compliant payroll process. By submitting accurate reports on time, updating employee information correctly, and avoiding common errors, you not only meet HMRC’s expectations, you also build trust within your business.
Using reliable payroll software and ensuring your team receives regular training keeps your payroll system efficient and up to date. Staying on top of changes in HMRC guidance and payroll legislation helps you prevent fines and ensures your employees get paid correctly and on time.
Frequently Asked Questions
What’s the difference between EPS and FPS?
The Full Payment Submission (FPS) reports employee pay, tax, and National Insurance details to HMRC each time you run payroll. It includes payment dates, tax codes, and deductions. The Employer Payment Summary (EPS) is used when there are no payments in a pay period or to claim things like statutory pay or NIC reliefs. Knowing when to use each form helps keep your payroll accurate and HMRC-compliant.
What happens after I send an FPS to HMRC?
Once your FPS is submitted, HMRC sends an acknowledgment to confirm receipt. They then process and verify the information you’ve provided. If any issues arise, such as mismatched employee data or errors in deductions, HMRC will notify you. This gives you a chance to correct the data promptly and avoid potential penalties.
Can I send another FPS after payday?
Yes, you can submit a corrected FPS after payday if you need to fix errors or report additional information. It’s important to do this as soon as possible to minimise any impact on your PAYE records and to avoid penalties. Timely corrections help ensure your employees’ tax and benefit records remain accurate.
Is it illegal for my employer to pay me cash?
No, paying in cash isn’t illegal, but your employer must still follow payroll rules. That means issuing a payslip, deducting tax and National Insurance through PAYE, and meeting minimum wage laws. If they skip these steps, it’s illegal and could lead to penalties.
What if I miss my FPS?
If an employer misses an FPS (Full Payment Submission), they could face fines from HMRC. It’s important to file on or before payday. If you miss it, submit it as soon as possible and include a reason for the delay to avoid or reduce penalties.
