Employer Payment Summary (EPS)

Employer Payment Summary (EPS) is a crucial report submitted by UK employers to HM Revenue and Customs (HMRC) to inform about statutory payment claims, recoverable amounts, and adjustments for Pay As You Earn (PAYE) contributions. Understanding EPS helps businesses manage payroll reporting with accuracy and compliance. An interesting fact is that an EPS must be submitted if an employer wants to recover statutory payments such as Statutory Sick Pay or Statutory Maternity Pay, even when no employees are paid in a given period.

What is Employer Payment Summary (EPS)?

Employer Payment Summary (EPS) is a submission made by employers under the Real Time Information (RTI) system to HMRC that reports adjustments or claims related to employee payments. Unlike the Full Payment Submission (FPS), which reports employees’ actual pay and deductions each pay period, EPS informs HMRC about statutory payment recoveries, apprenticeship levy, and no payment periods. For example, if a business pays no staff in a month but needs to claim back Statutory Sick Pay, it submits an EPS. Consider a business with 10 employees but during April, due to a lockdown, they paid no salaries but are reclaiming Statutory Maternity Pay for one employee. They submit an EPS to HMRC specifying the reclaimable amount for SMP, ensuring the business receives due refunds.

How Does Employer Payment Summary (EPS) Work?

EPS works as a complementary submission to the FPS in the payroll process. It reports details like statutory payments an employer will recover from HMRC, employment allowance claims, apprenticeship levy payments, or compensation relating to COVID-19 grants. This helps HMRC adjust the employer’s PAYE liability accordingly. For instance, if a company claims Employment Allowance to reduce their National Insurance contributions, this is declared in the EPS alongside any statutory payment recoveries, ensuring their PAYE submissions are accurate and up to date.

Key Components Reported in an EPS

The EPS reports figures such as total PAYE deductions recovered from HMRC, details of employment allowance claimed, apprenticeship levy due, and specifics of no payment periods. It is submitted monthly or less frequently if applicable. As an example, a payroll department records £2,000 in statutory payment reclaims and claims £4,000 Employment Allowance. The EPS includes these adjustments enabling HMRC to reduce the PAYE payments due.

Practical Example of EPS Submission Calculation

Suppose a business, during May, has the following adjustments: - Statutory Sick Pay recoverable: £1,200 - Employment Allowance claimed: £4,000 - Apprenticeship Levy due: £300 The EPS submission reports these figures to HMRC. This will reduce the overall PAYE bill by the sum of reclaims and allowances, i.e., £1,200 + £4,000 = £5,200 offset against PAYE due, while the Levy of £300 is separately payable. These figures ensure proper tax credits and liabilities are calculated, preventing overpayment or underpayment in payroll taxes.

When and How to Submit an EPS

An EPS must be submitted if there are statutory payment claims, no employees paid in a period, or adjustments to apprenticeship levy. Submissions are usually monthly and sent electronically via payroll software to HMRC’s RTI system. Missing EPS submissions when required can cause errors in PAYE accounting and payment processing.

Important Considerations for Employers

Accurate reporting on the EPS requires detailed payroll records, coordination between payroll teams and accounting systems, and awareness of statutory scheme changes. Employers must keep updated on HMRC rules to ensure compliance. Failing to report apprenticeship levy or statutory payments correctly can lead to penalties. For businesses navigating payroll complexities and related funding or support options, understanding the Employment Allowance and related credits can be beneficial. In conclusion, the Employer Payment Summary (EPS) is an essential part of payroll reporting in the UK, enabling employers to communicate relevant statutory payment claims and adjustments to HMRC. Accurate EPS submissions help maintain correct PAYE tax records and support cash flow management through recoveries. For businesses needing assistance with payroll-related financial planning or access to support, exploring business funding solutions is recommended for educational insights and potential aid.