When it comes to running payroll in the UK, most employers focus on submitting Full Payment Submissions (FPS) to HMRC. But there’s another equally important report that often gets overlooked—the Employer Payment Summary (EPS). Miss it, and you might end up paying more than you should or falling out of compliance entirely.
So, what exactly is EPS Payroll? Why is it needed, and how can it actually work in your favour? Let’s break it down.
What is EPS Payroll?
EPS, or Employer Payment Summary, is a key part of UK payroll reporting. It’s used when you need to tell HM Revenue and Customs (HMRC) about things that don’t show up in your regular payroll submissions, like statutory payments reclaimed, no payments made to employees, or adjustments to what you owe.
Think of it as a way to update HMRC about any changes to your PAYE bill(Pay As You Earn), so you’re not overpaying or missing something important.
Key Components of EPS Payroll
-
- Statutory Maternity Pay (SMP)
- Statutory Paternity Pay (SPP)
- Statutory Adoption Pay (SAP)
- Shared Parental Pay (ShPP)
- Statutory Parental Bereavement Pay (SPBP)
Statutory Payment Recovery
Employers can reclaim statutory payments such as: - Apprenticeship Levy
Employers must report whether they can pay the Apprenticeship Levy, which supports workforce development through training programs. - Employment Allowance Claim
This allows eligible businesses to reduce their annual National Insurance liability by up to a certain amount. It must be claimed via the EPS submission. - Construction Industry Scheme (CIS) Deductions
Companies registered under the CIS can report deductions suffered, which affect their overall PAYE payments. - Bank Account Information
Employers must provide up-to-date bank details for accurate payment processing and to ensure any applicable refunds from HMRC can be issued correctly.
Get EPS Right: Stay Aligned with HMRC and Avoid Surprises
EPS holds great significance for employers and employees. To clarify, here are some of the main reasons for sending an EPS:
| Purpose | Description |
|---|---|
| Statutory Payment Recovery | If an employee is on statutory leave for maternity, paternity, adoption, or parental bereavement, the employer may reclaim these amounts through EPS. |
| Apprenticeship Levy | Some employers must pay a tax, the apprenticeship levy, to fund apprenticeships. They inform HMRC through the EPS. |
| Employment Allowance Claim | Certain employers are eligible for the employment allowance, which reduces their National Insurance bill. This claim is submitted via EPS once a year. |
| CIS Deductions Claimed | Applicable for limited companies only; this is submitted once a month if claimed. |
| Bank Account Details | If the employer has requested a refund from HMRC, they may need to confirm their bank account details. |
| No Employee Payment | The employer must notify HMRC if they haven’t paid any employees during a whole tax month. |
| Scheme Ceased | Employers must inform HMRC when they no longer require the PAYE scheme. |
The Role of Full Payment Submission (FPS) in Payroll
The Full Payment Submission (FPS) complements the EPS and plays a key role in payroll. When an employer disburses wages to their employees, they must notify HMRC of any alterations or updates to the employees’ pay or tax through an FPS. This submission contains extensive information about each employee, such as their PAYE details, tax code, and other relevant deductions.
Submitting an FPS is not just about informing HMRC; it also provides the necessary data for calculating deductions such as tax, National Insurance contributions, and student loan repayments. Moreover, it allows important information updates like a new starter or leaver information to be communicated accurately and timely. Note that an FPS must be submitted each time payroll is run, even when an employee hasn’t worked within such a pay period.
This practice, hence, ensures that all employee payments are properly tracked and that all statutory obligations to HMRC are met, preventing potential penalties for late submissions.
EPS Prep Made Easy—No More Guesswork or Panic
Submitting an EPS isn’t just a task—it’s a safeguard. It lets HMRC know about adjustments like statutory payments, Employment Allowance claims, or even months with no pay. A few careful steps now can save you from costly mistakes later.
1. Activating the New Tax Year
The activation of the new tax year begins once you start using Basic PAYE Tools. You need to activate this before carrying out tasks for every tax year. You can still view all the information from your previous years, but remember, if you decide to make any changes to these past records after activating the new year, you will be required to update this information manually prior to entering payment specifics for the fresh tax year.
It’s essential to ensure that updates available for the new tax year are checked and installed on your Basic PAYE Tools. Once done, remember to check the automatic updates settings. Keeping this activated will ensure that you always get the most current changes incorporated into your system.
2. Selecting the Correct Employer and Tax Year
To ensure no errors or mix-ups occur when submitting your EPS, it’s critical to select the correct employer and relevant tax year. This selection process begins from the Software home page, where you’ll choose the desired employer from the employer list menu. Following that, you then proceed to select the correct tax year that relates to your task. For instance, when preparing to submit an EPS for the previous tax year, make sure that a specific year is selected.
Carefully double-check these details before submission to avoid unnecessary complications and penalties from HMRC due to incorrect information. This practice aids in maintaining a comprehensive and accurate record of all your transactions and streamlines your operations with HMRC.
How to Claim Reduction in HMRC Payments
If you’re managing payroll for your business and wondering what payroll EPS is used for beyond standard reporting—one of its critical functions is to help you claim reductions on the payments due to HMRC. This can ease your cash flow and ensure accurate PAYE settlements.
Follow these simple steps to claim a reduction through Payroll EPS:
Step 1: Calculate Recoverable Amounts
Identify the statutory payments your business can reclaim for the relevant tax month. These may include:
- Statutory Maternity Pay (SMP)
- Statutory Paternity Pay (SPP)
- Statutory Adoption Pay (SAP)
- Shared Parental Pay (ShPP)
- Statutory Parental Bereavement Pay (SPBP)
Make sure to calculate these correctly to reflect what’s recoverable.
Step 2: Input in Basic PAYE Tools
Next, open Basic PAYE Tool and enter the calculated recoverable amounts. HMRC provides this tool, which is essential for submitting EPS Payroll data accurately.
Step 3: Submit the EPS to HMRC
- Once everything is entered, submit your Employer Payment Summary (EPS) to HMRC.
- Deadline: Submit before the 19th of the following tax month to avoid delays or missed credits.
By leveraging EPS Payroll, you reduce the total PAYE liability reflected in your FPS. This helps your company optimize cash flow and maintain precise payroll records—especially when dealing with recoverable statutory payments or adjustments like employment allowance, CIS deductions, or apprenticeship levy declarations.
If you’ve ever asked what EPS payroll is used for practically—this is it. A powerful tool for efficient payroll management and staying on top of HMRC requirements.
Calculating and Reporting Recoverable Amounts
Calculating and reporting recoverable amounts is an essential aspect of processing EPS. Employers often can reclaim certain payments made during a tax month under UK payroll systems. For instance, if an employer has paid any statutory payments to employees, these amounts can be recovered. These include SMP, SAP, SPP, and others.
So, how does one go about this? First, calculate these recoverable amounts for the tax month on Basic PAYE Tools. Then, accurately enter these amounts into your system.
To maintain clarity and transparency, it’s recommended that you compute and track these recoverable amounts every month. This step ensures a clear record of each month’s recoverable amounts and helps you manage your company’s financial resources efficiently. Then, submit these calculated recoverable amounts to HMRC using the Employer Payment Summary.
Follow these processes accurately and promptly to safeguard your organisation from penalties due to late or incorrect submissions.
Errors in FPS and Their Impact on EPS
Mistakes in the Full Payment Submission (FPS) can create a ripple effect that distorts your Employer Payment Summary (EPS). Here’s how:
Common FPS Errors:
- Late Submission – Could lead to HMRC penalties.
- Incorrect Pay or Deductions – Affects the reported PAYE values.
- Wrong Employee Info – Errors in names, NI numbers, or tax codes.
- Incorrect Tax Year – Mismatches cause record inconsistencies.
- Wrong Start/Leaving Dates – Misleading employment status updates.
How These Impact EPS:
- Inaccurate PAYE Calculations – Misreported totals due to earlier FPS errors.
- Statutory Pay Reclaim Issues – Claims may be under/overestimated.
- Apprenticeship Levy Miscalculations – Affects the reported liability.
- Cumulative Errors – May cause ongoing discrepancies across reporting cycles.
What to Do if You Spot an Error:
- Amend Year-to-Date (YTD) Figures in your next regular FPS.
- No need to re-send the old FPS—just ensure the YTD reflects the correction.
- Double-check entries before each submission to prevent future issues.
What Happens If You Do Not Pay Any Employees for a Whole Tax Month?
When you do not pay employees during a wholfe tax month, the accurate procedure is to notify HMRC by sending an Employer Payment Summary (EPS). In this case, EPS replaces the ‘Nil payslip.’ This report can be submitted for the tax month that has just ended or the current tax month.
It is also crucial to note that one can report no payments to employees for one or more future tax months, up to a maximum of six months. However, the start date for this should be the first day of the next tax month.
Remember, prompt and accurate reporting of such instances will prevent HMRC from expecting a Full Payment Submission and can avoid sending demand notes on estimated amounts based on previous returns. It’s always best to keep HMRC in the loop for smooth payroll operations and a clear track record.
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Conclusion: What is EPS Payroll?
By clearly understanding the relationship between EPS and Full Payment Submission (FPS), employers can ensure that all liabilities, adjustments, and recoverable amounts are properly reported to HMRC (HM Revenue and Customs). This clarity not only minimizes risks of penalties but also streamlines payroll processing for future cycles.
Additionally, putting robust checks in place—like selecting the correct tax year, validating employee data, and proactively addressing FPS errors—forms the backbone of a resilient payroll system. These actions contribute directly to timely reporting, better staff trust, and a smoother internal workflow.
Ultimately, consistent and accurate communication with HMRC helps maintain your company’s reputation, avoids costly setbacks, and supports long-term financial health.
Frequently Asked Questions
How Often Should EPS Be Submitted?
The Employer Payment Summary (EPS) needs to be submitted to HMRC by the 19th of the following tax month, usually once a month. However, some types of EPS, such as those claiming the employment allowance, might only be required once a year.
What is the Difference Between FPS and EPS?
While both forms contribute towards payroll, they serve different functions. FPS reports payments given to employees and deductions made, and this is typically sent every time the employer pays their employees. On the other hand, EPS primarily reports values that are not included in FPS, affecting the employer’s payment to HMRC.
What Steps Should Be Taken When Errors Occur in EPS?
When an error is identified in the current tax year, you should send a corrected EPS with the correct year-to-date figures as soon as possible. For errors from a previous tax year, an EPS with the correct year-end figures should be sent for that specific year when the error occurred.
