Chapter 9: Payroll Reporting Flashcards
When must payslips be given and what must they include?
Payslips must be provided to all employees on or before payday, either as a printed document or an email attachment. They must include:
- Gross pay
- Deductions
- Net pay
What is the RTI system?
RTI stands for Real Time Information and is a system where payroll information must be reported to HMRC at or before each payday
What is an FPS?
FPS stands for Full Payment Submission and is an electronic report submitted as part of RTI, detailing employees’ pay, deductions, and other payroll information
When must an FPS be submitted, and why shouldn’t it be submitted too early?
An FPS must be submitted on or before the employees’ payday.
It should not be submitted too early as any changes after submission would require an updated FPS to be filed.
What information must be reported for each employee in an FPS?
Individual Information
- Title and name
- Gender
- Address (if changed or NINO is not known)
- National Insurance Number (NINO), if known
- PAYE tax code
- Payroll ID (unique number assigned by payroll)
- Indicator of pay frequency (e.g., weekly, monthly)
- Hours usually worked
Running Total
- Total cumulative taxable pay for the tax year
- Total cumulative tax deducted for the tax year
- Total student loan deductions
What employer information must be included in a Full Payment Submission (FPS)?
- HMRC office number
- Related tax year
- PAYE number
- Accounts office reference
- Total class 1 secondary (employer’s) NIC payable in the pay period
- Information on new starters and leavers for the period
What is a P45?
A P45 is a form used when an employee leaves a job, providing details about their pay, tax, and other related information.
Part 1A is kept by the employee.
Parts 2 and 3 are given to the employee’s new employer.
What information does the P45 contain?
- PAYE reference of the old employer
- Total pay and tax deducted for the tax year
- Employee’s personal details
- Employee’s tax code at end of employment
- The date the employment ended
How does an employer determine the tax code for a new employee?
If the employee has a P45 and their previous job ended in the same tax year:
The employer can use the P45 to get the tax code and apply it until a new one is issued.
If the employee doesn’t have a P45 or their previous job ended in a different tax year:
The employee will typically be put on an emergency tax code.
What is an EPS?
An EPS stands for Employer Payment Summary, it is a report submitted to HMRC by employers detailing certain payments or claims.
What are the two ways an EPS can be used?
Submitted to HMRC alongside an FPS when an employer either:
- Reclaims statutory maternity, paternity or adoption payments
- Claims the Employment Allowance
Submitted to HMRC in the place of an FPS when an employer:
- hasn’t paid any employees in a tax month
When must an EPS be submitted, and what happens if it is late?
An EPS must be submitted to HMRC by the 19th of the month following the tax month it relates to.
Failure to submit may result in HMRC estimating the PAYE liability and issuing a penalty.
What information is included in an EPS?
- Employer name, PAYE reference, and Accounts Office reference
- Tax year
- Period the EPS relates to
Confirmation that either: - no employees paid in the period,
OR - amounts reclaimed for SMP, SPP, or SAP (statutory maternity, paternity or adoption payments)
What must an employer do at the end of the tax year in regards to payroll and employee reporting?
- Submit the final FPS of the year (or an EPS)
- Complete employee P60 and P11D forms
- Pay any outstanding income tax and NICs
What is a P60 and what information is included in it?
A P60 is an end-of-year tax certificate given to employees, summarising their total pay and deductions for the tax year.
- Employer’s name, adress and PAYE reference
- Employee’s name, National Insurance Number (NINO) and tax code
- Tax year
- Total taxable earnings for the year
- Total PAYE tax and NICs deducted
What is a P11D and what does it include?
A P11D is a form completed for employees who received non-cash taxable benefits such as company cars or private medical care.
It includes:
- Descriptions of the benefits
- The cash equivalent of each benefit
- Employee name, National insurance number and date of birth
- Employer name and PAYE reference
Who may require wage reports to be signed before submission and why?
A senior manager, managing director, or business owner may require wage reports to be signed to preserve the integrity of all payroll submissions
What are key ethical responsibilities when working in payroll?
- Don’t undertake work outside your knowledge or training; pass queries to your manager.
- Act with integrity
- Keep employee information confidential, disclosing only with permission or legal duty.
What is an Employer Compliance Review?
A review by HMRC that ensures employers meet PAYE and NICs obligations.
What is checked during an Employer Compliance Review?
If the employer has properly deducted and accounted for PAYE and NICs, and whether required PAYE forms are completed correctly.
What happens if HMRC discovers an error during an Employer Compliance Review?
Additional PAYE and NICs may be payable, and interest and penalties could be charged on any underpayment.
What are the data protection principles under GDPR?
- Lawfulness, fairness, and transparency
- Purpose limitation
- Integrity and confidentiality
- Data minimisation
- Storage limitation
- Accuracy
What does the principle of accountability in GDPR mean for businesses?
Businesses must take responsibility for the use of personal data and ensure compliance with all other data protection principles.
