HMRC have announced a fundamental change in relation to how amendments are made when an inaccuracy in payroll data is identified, after the end of the Tax Year and not amended before the 19 April. HMRC's current processes (Pre 20 April 2019) requires the employer to submit an Earlier Year Update (EYU) to correct the account. This process involves calculating the difference between the original submission and the correct position for each employee and submitting the difference (the delta amount) on an RTI EYU submission.
From April 2019 HMRC will be extending the use of the RTI Full Payment Submission (FPS) to allow employers to continue to report revised Year to Date (YTD) payment data after the current deadline of the 19th April, following the end of the Tax Year. This will simplify the process by removing any unnecessary complexity and will align HMRC systems and employer payroll records sooner.
When is the change happening?
From 20 April 2019 HMRC will be accepting the RTI FPS with YTD information to make amendments to the Tax Year ending 5 April 2019. To aid the transition to the new process HMRC will still accept an EYU to make amendments to this tax year. In this transition year Employers will need to choose one of these methods for amendments and continue with this for any further amendments to the year as required.
From April 2020 the EYU will no longer be a valid submission to make amendment to the Tax Year ending 5 April 2020 and any amendments will need to be made using an FPS.
- Amendments to the Tax Year ending 5 April 2019 from 20 April 2019 – an EYU or FPS will be accepted. This is to be a pilot year and the use of the FPS after the year end will be voluntary.
- Amendments to the Tax Year ending 5 April 2020 (and future years) from 20 April 2020 – will be made by the submission of an FPS
- Amendments to Tax Years ending 5 April 2018 and earlier – will be made by the submission of an EYU
- The Employer Payment Summary (EPS) will not be impacted by this change.
From 20 April 2020 onwards HMRC’s Basic PAYE Tools software will be updated to allow customers to submit an FPS for the year ending 5 April 2020 and onwards to report any amendments.
It is not anticipated that any changes will be made to the format of the FPS when it is used after the 19 April following the year end. The FPS will provide an update to the last period reported, with a matching or later pay date for the individual, to indicate a change in the year to date figures.
Further information on the changes will be published in HMRC's Employer Bulletins on 15 February 2019 and 11 April 2019. All HMRC and GOV.UK guidance will be updated prior to the implementation of the changes.