Correcting payroll mistakes for an earlier tax year

HMRC has reminded employers and advisers about the process for correcting payroll errors in an earlier tax year.

If the wrong pay or deductions were reported for the 2020-21 tax year or any later tax years employers can correct this by submitting another full payment submission (FPS) with the correct year to date figures.

Errors in the 2019-20 tax year should be corrected by submitting an earlier year update (EYU) or an FPS with the correct year to date figures if the software allows.

Employers must use an EYU to correct errors in 2017-18 or 2018-19.

If the employer used the wrong category letter for an employee’s National Insurance deductions in 2020-21 or a later tax year they can submit an additional FPS with the correct category letter and correct year to date National Insurance for this category letter.

For 2019-20 tax year it may be possible to...