What HMRC expects: FPS and EPS
Every time you pay your staff, you send HMRC a Full Payment Submission (FPS). It must go on or before payday, even if you pay HMRC quarterly rather than monthly. This system is called Real Time Information, or RTI.
An Employer Payment Summary (EPS) is the second report. Send it by the 19th after the tax month to claim a reduction in what you owe, such as statutory pay. If you paid nobody in that tax month, send it instead of an FPS.
A tax month runs from the 6th of one month to the 5th of the next.
The monthly penalty bands
You can be penalised if your FPS is late, if you send fewer FPSs than HMRC expects, or if you skip the EPS for a tax month in which you paid nobody. HMRC sends penalty notices every quarter. Pay within 30 days of receiving a notice and you avoid interest.
The monthly charge depends on how many employees you have. If you run more than one PAYE scheme, you can be charged for each one:
- 1 to 9 employees: £100 a month
- 10 to 49 employees: £200 a month
- 50 to 249 employees: £300 a month
- 250 or more employees: £400 a month
When you will not be charged
No penalty applies to a late FPS if all the payments on it are within 3 days of your employees' payday. HMRC warns that employers who regularly file within that window may still be contacted or considered for a penalty.
You are also not charged for your first late or missed report in the tax year, unless you are registered as an annual scheme. A new employer who sends a first FPS within 30 days of paying an employee is not charged either.
For example, an employer with 4 employees files late in May for the first time that tax year and pays nothing. If the same employer files late again in June, outside the 3 day window, HMRC can charge £100 for that month.
How to appeal a penalty
You can appeal if the penalty is not due, the amount is wrong, or you had a reasonable excuse. HMRC's listed grounds include ill health, IT difficulty, death or bereavement, fire, flood or natural disaster, and theft or crime.
You can appeal online through HMRC's PAYE for employers service: choose Appeal a penalty and quote the unique ID shown on the notice. You can also appeal in writing. The online service has no print function, so take a screen print of the confirmation if you want a copy.
How to avoid missing a report
Send the FPS on or before payday, but not too early, because a change such as a leaver means you need to send a corrected FPS. If you spot a mistake, send a corrected FPS as soon as you can.
Check your PAYE online account each month. If a report is missing, HMRC may raise a specified charge based on an estimate. Sending the missing FPS or EPS replaces that estimate with the amount actually due.
Build a simple routine:
- Put each payday and its FPS in your calendar.
- Send an EPS by the 19th for any tax month where you paid nobody.
- If you will not pay anyone for 1 to 12 months, tell HMRC in advance using the period of inactivity fields on your EPS.
- Open any penalty notice the day it arrives and check the unique ID.