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    TaxKilnUK tax guidance
    TaxKilnUK tax guidance

    Being an employer → RTI mechanics

    RTI Mechanics — FPS + EPS + Year-End + Penalty Regime

    Real Time Information (RTI) is the digital filing regime introduced from April 2013. Employers must file a Full Payment Submission (FPS) on or before each payday, plus an Employer Payment Summary (EPS) where they reduce HMRC liability (e.g. Employment Allowance, statutory pay reclaims, CIS deductions suffered) or have a nil payment period. Year-end: final FPS or EPS by 19 April; P60s to employees by 31 May; P11D/P11D(b) for benefits by 6 July. Late-filing penalties: £100 (1-9 employees), £200 (10-49), £300 (50-249), £400 (250+) per month, plus 5% surcharge if more than 3 months late (Sch 55 FA 2009 + Sch 24 FA 2021).

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    Guidance, not advice. We explain the rules, we don't assess your situation. Always seek financial or tax advice from your accountant, or contact HMRC. Read our editorial scope →

    In plain English

    Under RTI you tell HMRC about every payment to every employee, every time you pay them — not once a year as under the old end-of-year P35 regime. The FPS is the headline file: payments, deductions, NI, tax code, hours worked, leaver/starter info. It must reach HMRC on or before the payday — even one day late triggers a penalty (subject to a 3-day grace concession HMRC has historically applied for small employers, though don't rely on it). The EPS is the offset file. It tells HMRC about reductions to your liability — Employment Allowance, recoverable SMP/SPP etc, Apprenticeship Levy allowance allocation, CIS deductions you've suffered as a subcontractor — and any nil payment period (so HMRC doesn't chase you). EPS is filed by the 19th of the following tax month. Year-end: by 19 April you mark your final FPS for the year. By 31 May employees must receive their P60. By 6 July, if you've provided any taxable benefits-in-kind that aren't payrolled, file P11D for each employee + P11D(b) for the Class 1A NIC liability. Mandatory payrolling of benefits arrives April 2027 (delayed from April 2026), which will replace most P11Ds. Penalty regime under Schedule 55 FA 2009 + Sch 24 FA 2021: monthly band by employee count (£100/£200/£300/£400) for each unfiled FPS, plus 5% additional charge if >3 months late.

    How it works

    FPS — Full Payment Submission

    Filed on or before each payday. Contains: employee personal details + NI number; tax code + tax basis; payment + deductions; NI category + NICable pay; hours worked band; starter declaration / leaver date. New starters generate an FPS that effectively replaces the old P45/P46 process.

    EPS — Employer Payment Summary

    Filed by 19th of following tax month. Use cases: claiming Employment Allowance (£10,500 from April 2025); recovering statutory pay (SMP/SPP/SAP/ShPP/SPBP/SNCP) + SER reclaim (109% from April 2025); allocating Apprenticeship Levy allowance; declaring CIS deductions suffered; declaring a nil payment period (no payments to anyone that month — prevents HMRC chasing).

    Monthly payment to HMRC

    Pay the net liability (PAYE + employee NI + employer NI − statutory pay recovered − EA − CIS suffered) by 22nd of following tax month (electronic) / 19th (post). Use the Accounts Office reference. Quarterly payment available if monthly liability is under £1,500/month average.

    Year-end procedure

    Mark the final FPS/EPS for the tax year by 19 April. Issue P60 to every employee on payroll at 5 April by 31 May. For BiKs/expenses not payrolled: file P11D per employee + P11D(b) for Class 1A NIC by 6 July; pay Class 1A by 22 July (electronic) / 19 July (post).

    Penalty regime

    Monthly band per unfiled FPS: 1-9 employees £100; 10-49 £200; 50-249 £300; 250+ £400. Concession: first late FPS in a tax year may not be penalised (HMRC operational). 5% additional charge on tax/NIC unpaid >3 months late. Specified charges issued where HMRC has no FPS data. Daily penalties available for sustained non-compliance.

    Who this applies to + key conditions

    Statute + manual references

    Primary: Income Tax (PAYE) Regulations 2003 (SI 2003/2682) — Real Time Information requirements as amended.

    Related: Finance Act 2009 Schedule 55 — late filing penalties; Finance Act 2021 Schedule 24 — refined RTI penalty regime; Income Tax (Pay As You Earn) (Amendment No. 2) Regulations 2012 (SI 2012/822) — RTI introduction; Social Security (Contributions) Regulations 2001 (SI 2001/1004) — NIC reporting

    HMRC manual: PAYE Manual (PAYE40000+ RTI); CWG2 Employer Further Guide; PAYE76025 (penalties)

    Common mistakes + traps

    Worked example

    Alpha Ltd, 6 employees, monthly payroll, claims Employment Allowance

    Alpha Ltd runs monthly payroll on the 28th. Tax month 1 (6 April–5 May 2025): gross pay £18,000; PAYE £2,400; employee NI £900; employer NI £1,950; SMP paid £750 (Karen on maternity leave) — Alpha is a small employer so SER reclaim applies at 109%.

    1. Step 1 — File FPS on or before 28 April with all 6 employee records.
    2. Step 2 — File EPS by 19 May claiming: Employment Allowance £10,500 (for the year, allocated across months); SMP recovery £750 × 109% = £817.50.
    3. Step 3 — Calculate net HMRC liability for month 1: £2,400 (PAYE) + £900 (employee NI) + £1,950 (employer NI) − £1,950 (EA absorbs employer NI this month) − £817.50 (SMP+SER) = £2,482.50.
    4. Step 4 — Pay HMRC by 22 May (electronic) using Accounts Office reference + month 1 indicator.
    5. Step 5 — Repeat monthly until EA £10,500 exhausted (then employer NI starts being paid in full); at year-end, file final FPS + EPS by 19 April 2026; issue P60s by 31 May 2026.

    Outcome: Alpha files on-time FPS + EPS, claims EA + SER, pays net £2,482.50 in month 1, avoids penalty exposure entirely.

    How this connects to the rest of the framework

    Becoming an employer + PAYE registration →

    RTI obligations begin from PAYE scheme set-up.

    Employer NICs 2025/26 →

    Employment Allowance £10,500 is claimed via EPS — must be claimed each tax year.

    Statutory pay (SSP / SMP / SPP / SAP / ShPP / SPBP / SNCP) →

    SER reclaim (109% from April 2025) is recovered via EPS.

    Class 1A NIC + mandatory payrolling →

    P11D/P11D(b) filing is part of year-end RTI; mandatory payrolling from April 2027 will absorb most BiKs into FPS.

    CIS for contractors →

    Subcontractor CIS deductions suffered are reclaimed via EPS.

    Frequently asked questions

    What happens if I miss the Self Assessment deadline?+
    The Self Assessment deadline is 31 January (online filing) for the previous tax year. Miss it and HMRC apply an automatic £100 penalty. Beyond that: £10 per day from 3 months late (capped at £900), 5% of tax due at 6 months late, and another 5% at 12 months late, under Schedule 55 of the Taxes Management Act 1970. If you have a genuine reason (serious illness, bereavement, technical issue with HMRC's systems) you can appeal with evidence; HMRC accepts reasonable excuse appeals in most genuine cases.
    Do I need an accountant or can I file Self Assessment myself?+
    Legally you can file Self Assessment yourself via gov.uk for free, most simple sole-trader returns (single income source, basic expenses) are realistic to self-file. An accountant adds real value when: your trading profit is above £40,000 (extraction-strategy decisions matter), you have multiple income streams (PAYE + self-employment + property + dividends), you've crossed the £90,000 VAT threshold, you're considering incorporation, or you have an HMRC enquiry. Expect to pay £400-£1,500/year for a typical sole-trader accountant; the cost is itself a deductible expense.
    How do payments on account work?+
    When your Self Assessment tax bill exceeds £1,000 for the first time, HMRC requires payments on account toward NEXT year's tax. Half the current bill is due 31 January (alongside the current bill); the other half is due 31 July. So your first January after crossing the threshold can hit with a double-bill: last year's balance + first payment on account. Adjust via Form SA303 if you expect next year's income to drop substantially. Payments on account don't apply if more than 80% of your tax is collected via PAYE.
    What if I file FPS one day late?+
    Triggers monthly band penalty (£100-£400 by employee count). HMRC has historically applied informal grace for very small employers but not in statute.
    Do I need to file an EPS if I have no adjustments?+
    Not normally — but you must file a nil EPS in any tax month where you make zero payments to anyone, otherwise HMRC assumes underpayment.
    When is mandatory payrolling of benefits effective?+
    April 2027 (delayed from the original April 2026 announcement; verify current status before relying on the timeline).
    Can I use HMRC Basic PAYE Tools for RTI?+
    Yes — Basic PAYE Tools is HMRC's free RTI-capable software for employers with up to 9 employees.

    Free + regulated-body resources

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