Accurate payroll submissions are critical for ensuring employees and employers pay the correct amount of tax and National Insurance Contributions (NICs), and to avoid administrative complications. In some cases, errors can also result in the submission being rejected, which in the worse case scenario could affect an employee’s Universal Credit claim.

HMRC are seeking to raise awareness of the following common employer errors on payroll submissions, which can lead to duplicate employments and incorrect tax and NIC deductions. 

1. Payroll ID changes and duplicate employments

HMRC are seeing repeated incidents of the payroll ID change indicator not being used correctly where employees’ payroll IDs change. Typically, the payroll ID change indicator is either not ticked, or the previous payroll ID is not provided.

HMRC systems treat the updated payroll ID as a new employment rather than a continuation of the existing one. This can result in duplicate employment records, incorrect year-to-date tax information, problems with PAYE codes, and the need for employers to contact HMRC to resolve discrepancies, often requiring manual intervention to correct PAYE records. Delays resolving these issues can result in employees paying the incorrect amount of tax, potentially putting them out of pocket or creating an unexpected tax liability down the line.

HMRC have also experienced issues where employers submit a start date or new starter declaration instead of using the payroll ID change indicator. While start dates are appropriate for new employees, using them incorrectly can cause HMRC systems to create a second employment record for the same individual.

2. Reusing payroll IDs

Reusing payroll IDs for different employees is another frequent cause of errors, resulting in PAYE data being attributed to the wrong employee, split RTI records, disputed charges and manual intervention required to correct the position.

3. Full Payment Submission (FPS) reporting issues

HMRC also emphasise the importance of employers completing FPS fields correctly – in particular, new employments must include a start date. Without this, HMRC systems are likely to misinterpret separate employments as being one ongoing PAYE source. 

Best practice to avoid these errors

To avoid these problems, employers should ensure that 

• They use the payroll ID change indicator when filing the relevant payroll returns following a payroll ID change, ensuring they provide both the old and new payroll IDs.
• Each employee is assigned a unique payroll ID which is never reused even after the employee has left the employment.
• Start dates are used only for new employees, and are left blank for continuing employments. 
• Taxable pay reflects the actual payments made in each period, and year-to-date totals are updated as necessary to take account of those pay figures for the period.

Taking these steps will help reduce avoidable corrections and PAYE errors, minimise HMRC queries, and improve the overall accuracy of RTI submissions.

This article reflects the position at the date of publication shown above. If you are reading this at a later date you are advised to check that that position has not changed in the time since.   

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