Your PAYE bill is not what you expected
Every month you have to pay HM Revenue and Customs (HMRC) what you owe as part of running payroll for your employees.
There are things you should check if your PAYE bill is not what you expected when you view your online account.
What to check
Make sure you sent your Full Payment Submission (FPS) or Employer Payment Summary (EPS) in time for the account to update.
You should also check that you:
1. Registering your new employee
Register your new employee with HM Revenue and Customs (HMRC) by including their details on a Full Payment Submission (FPS) the first time you pay them.
On this FPS, include:
Giving your employee a payroll ID
You can assign payroll IDs to your employees. The ID must be unique – so use a different one if:
- you re-employ someone – if you do this within the same tax year restart their year-to-date information from ‘£0.00’
- an employee has more than one job in the same PAYE scheme
2. What to do when an employee leaves
You need to tell HM Revenue and Customs (HMRC) when one of your employees leaves or retires, and deduct and pay the right tax and National Insurance.
What you need to do
You should put the employee’s leaving date on their payroll record and make deductions as normal when you send your next Full Payment Submission (FPS), unless you’re paying them a company pension.
You must also give the employee a P45.
If you’re exempt from filing your payroll online, you can order copies of P45s from HMRC.
If you need to change something
If the employee left in the current tax year and you did not report it in the month they left, you must include them in the next FPS. You must also:
- show the leaving date
- add ‘0’ in the ‘Pay and tax in this period’ field
- add the last reported figures of pay, tax, National Insurance and other payroll information in the ‘Year to date’ field
- show the ‘Payment date’ as either the current FPS payment date or the last date the employee was paid
- add ‘H’ (correcting an earlier payroll report) as your reason for reporting late if the ‘Payment date’ you entered is not the current FPS payment date
If the employee left in the tax year 2019 to 2020, you should send either an:
- Earlier Year Update (EYU) for that year using your payroll software or HMRC’s Basic PAYE Tools
- FPS for the previous year showing correct year to date information if your software supports it
If you put the wrong leaving date in your FPS, update your payroll records with the correct date. Do not report the amendment in your next FPS as this may create a duplicate record for the employee.
If you’ve reported an employee’s leaving date in your FPS and they carry on working for you:
- use the same payroll ID if you have not given them a P45 yet, remove the leaving date and do not put a new start date
- give them a new payroll ID if you’ve already given them a P45
Follow the guidance for correcting payroll errors to correct previously reported payroll figures.
Paying a company pension
If you’re paying a pension to the retiring employee:
- do not include their leaving details in your FPS as they’re still on your payroll
- use a different payroll ID for the pension payments, showing on the FPS that the payroll ID has changed and giving the previous payroll ID
- give the full annual amount of the pension
- use the employee’s existing tax code on a ‘week 1’ or ‘month 1’ basis until you receive a new code from HMRC, or on a cumulative basis if the first pension payment is in the new tax year
- put ‘Yes’ in the ‘Occupational pension indicator’ field for each pension payment
- give them a retirement statement showing their employment details up to their retirement date
Do not deduct National Insurance from the pension payments if your scheme is registered with HMRC. You should deduct tax in the normal way.
Paying statutory maternity, paternity or adoption pay
You must continue paying statutory maternity, paternity or adoption pay until the end of an employee’s statutory leave, even if they stop working for you. You should agree one of the following with the employee:
- give them a P45 when they stop working for you, then deduct tax on the remaining statutory payments using code 0T on a ‘week 1’ or ‘month 1’ basis (use the code S0T if they’re taxed at the Scottish rate or C0T if they’re taxed at the Welsh rate)
- use their usual tax code for the statutory payments and give them a P45 after you’ve made the final payment, recording the final payment date as their leaving date
Paying an employee after giving them a P45
If you have to pay an employee after they leave (including someone you’re giving a taxable redundancy payment over £30,000):
- use tax code 0T on a ‘week 1’ or ‘month 1’ basis (use the code S0T if they’re taxed at the Scottish rate or C0T if they’re taxed at the Welsh rate)
- deduct National Insurance (unless it’s a redundancy payment) and any student loan repayments as normal – but if it’s an ‘irregular’ payment like accrued holiday pay or an unexpected bonus, treat it as a weekly payment
- report the payment and deductions in your next FPS, using the employee’s original ‘Date of leaving’ and payroll ID, and set the ‘Payment after leaving’ indicator
- give the employee written confirmation of the payment showing the gross amount and deductions
- add the additional payment in the ‘Year to date’ field if the payment is in the same tax year
The payment should be the only one in the ‘Year to date’ field if it’s being paid in the next tax year.
You must not give the employee another P45.
You may get an incorrect bill and duplicate payroll records if you made a mistake. Both are usually corrected automatically – contact HMRC if your PAYE bill is still wrong by the 12th of the next tax month.
If you find a mistake, follow the guidance to:
You can also correct mistakes if you paid your employee the wrong amount or made incorrect deductions.
Get help to correct your PAYE bill
Contact HMRC’s employer helpline if you need help.