Full Payment Submission (FPS)

Q: What is a Full Payment Submission (FPS) in UK payroll?

A Full Payment Submission (FPS) is an electronic report employers send to HMRC every time staff are paid. The FPS details payments and deductions—such as tax and National Insurance—helping maintain accurate records in real time. Each FPS must be submitted on or before payday through compliant payroll software.

Q: How do you submit an FPS to HMRC?

Employers use payroll software to generate and send the FPS directly to HMRC, typically on or before each payday. The report includes gross and net pay, all statutory deductions, and relevant staff and employer reference details. HMRC uses this data for PAYE, tax, and benefit calculations.

Q: What happens if a business submits an FPS late or with errors?

If an FPS is late or incorrect, HMRC may issue penalties or warnings. It is critical to check payroll data before submission. Errors can often be amended in the next FPS, or an Employer Payment Summary (EPS) can be used to correct specific issues affecting previous submissions.

Q: Can an FPS be adjusted for missed or incorrect information?

Yes, if inaccurate information was reported, corrections can usually be made through the next regular FPS submission. For missing payments or periods with no staff paid, an Employer Payment Summary (EPS) should be used to notify HMRC and amend records.

Q: Why is FPS important for Universal Credit and employee benefits?

Timely, accurate FPS submissions ensure HMRC holds correct income data for benefit assessments, including Universal Credit. Real-time reporting allows for swifter, fairer benefit calculations and helps support employees’ financial well-being.

Finance Dictionary >Full Payment Submission (FPS)

Full Payment Submission (FPS) is a fundamental requirement for UK employers under the Real Time Information (RTI) system. It refers to a detailed report submitted to HM Revenue and Customs (HMRC) every time an employee is paid. This report itemises each employee’s pay, deductions for Pay as you earn (PAYE), National Insurance contributions, and other statutory payments or deductions. FPS ensures immediate and accurate payroll reporting, enabling HMRC to track earnings and deductions in real time. An interesting fact is that the introduction of FPS and RTI fundamentally changed payroll by requiring real-time, not annual, reporting, significantly reducing errors and fraud in the system.

What is Full Payment Submission (FPS)?

Full Payment Submission is a mandatory electronic report employers must send to HMRC each time they make a payment to their employees. This submission contains essential details: employee names, payment amounts, tax and National Insurance withheld, and any student loan deductions or statutory payments. For example, imagine a business with five staff members. On payday, after processing payroll, the employer’s software creates the FPS file, which specifies gross pay, tax, NI, and net pay for each employee. This file is then submitted to HMRC—typically on or before payday—to keep HMRC’s records current for tax and Universal Credit calculations.

Practical Example: Step-by-Step FPS Submission

Suppose a small business pays two employees weekly. Employee A earns £500 gross, while employee B earns £400. Payroll calculates tax and NI as follows: for Employee A, PAYE tax is £70, NI is £50; for Employee B, PAYE tax is £50, NI is £40. FPS will record: Employee A—gross pay £500, tax £70, NI £50, net pay £380; Employee B—gross £400, tax £50, NI £40, net £310. The employer submits this FPS electronically using payroll software—which automatically checks reporting accuracy and confirms delivery.

Historical Background and the Introduction of RTI

Before the implementation of RTI and FPS in 2013, employers reported PAYE details once a year at year-end. This caused discrepancies and made it difficult for HMRC to detect errors swiftly. FPS, a core RTI feature, now requires all employers to report payments precisely when made, aligning payroll operations with HMRC’s real-time systems. This change was driven by the need for faster, more accurate data and was intended to streamline tax credits and Universal Credit assessments for employees.

How FPS Works and Employer Responsibilities

FPS is normally submitted through accredited payroll software prior to each payment date. Employers must include all relevant staff, even if they earn less than the Lower Earnings Limit. Required information includes pay dates, amounts, employer references, and statutory deductions. Once submitted, HMRC uses FPS data to update tax records and calculate liabilities. If errors are found, employers may correct these in the next FPS or via an Employer Payment Summary (EPS). Mistiming or failure to submit FPS may result in penalties. Data security is paramount, as payroll files contain sensitive information and must meet validation rules enforced by HMRC’s systems.

Key Features and Common Scenarios

FPS not only provides HMRC with up-to-date payroll details but also supports employees’ claims for Universal Credit and other benefits. For instance, timely and accurate FPS submissions ensure that employees’ income is appropriately reflected when they apply for credits or loans. Employers processing high staff turnover—such as in hospitality—must include all starters, leavers, and employees with changed circumstances. The FPS is also essential for reconciling employer PAYE accounts with HMRC, helping avoid underpayment or overpayment issues.

Important Considerations for Compliance

To remain compliant, employers must verify all payroll data before submission, ensure deadlines (on or before payday) are met, and keep thorough records in case of future queries or audits. If there are no employees paid in a period, an EPS rather than FPS is required. Any late, missing, or incorrect FPS can lead to penalties. Automated payroll software helps reduce errors by prompting for all required fields and automatically validating files. Employers may also need to reference the Employer PAYE reference number for each submission to ensure HMRC can correctly allocate payments.

Resolving Differences: Discrepancies and Penalties

Occasionally, differences arise between what employers think they owe and what HMRC records from FPS data. Such discrepancies may be due to missed submissions, incorrect figures, or timing issues. Employers should reconcile payroll records regularly and contact HMRC if they find ongoing differences. Penalties for late or incorrect FPS submissions vary, but HMRC may issue warnings and fines based on the size of the business and the severity of non-compliance.

For many employers, managing FPS accurately is integral to business operations and employee welfare. Understanding payroll reporting not only ensures compliance but also supports effective financial planning. For more guidance on how accurate payroll processes underpin wider financial health, see our resources on business funding solutions for UK employers of every size.