Understanding Employer Payment Summary (EPS): When and How to Submit

The Employer Payment Summary (EPS) is a critical document for businesses in the UK, playing a key role in the payroll process. Understanding when and how to submit the EPS can ensure your business remains compliant with HMRC requirements. This guide will walk you through the essential aspects of the EPS, highlighting the best practices for timely and accurate submissions.

1. What is an Employer Payment Summary (EPS)?

The Employer Payment Summary (EPS) is a document that employers use to report payments to HMRC that cannot be reported on a Full Payment Submission (FPS). It is essential for declaring adjustments to the amounts owed to HMRC, such as statutory payments and Employment Allowance. The EPS is an integral part of the Real Time Information (RTI) system, which requires employers to report payroll data to HMRC each time they pay their employees.

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2. Why is Submitting an EPS Important?

Submitting an EPS is crucial for several reasons. Firstly, it allows you to inform HMRC of any adjustments to the amount you owe, ensuring your payments are accurate. Secondly, the EPS helps avoid penalties for underpayment or overpayment by accurately reporting the payments due. Lastly, it enables employers to claim reliefs, such as Employment Allowance or Small Employers' Relief, thereby reducing the overall liability.

3. When to Submit an EPS

Understanding the correct timing for submitting an EPS is vital for maintaining compliance with HMRC. Generally, you should submit an EPS if:

You have made any statutory payments (e.g., Statutory Maternity Pay, Statutory Sick Pay) that reduce the amount of PAYE, National Insurance Contributions (NICs), and Student Loan deductions you need to pay to HMRC.

You’re reclaiming Employment Allowance.

You haven’t paid any employees in a tax month and need to report this to HMRC.

You’re reporting the final payment for the tax year.

The EPS should be submitted by the 19th of the month following the tax month it relates to. For instance, if the EPS relates to adjustments made in June, it should be submitted by July 19th.

4. How to Prepare for an EPS Submission

Preparation is key to ensuring a smooth EPS submission process. Start by ensuring that all payroll data is accurate and up-to-date. This includes verifying employee details, statutory payments, and any adjustments that need to be reported. You should also ensure that your payroll software is compatible with HMRC’s RTI system. Most modern payroll software solutions have built-in features to handle EPS submissions, simplifying the process.

5. Steps to Submit an EPS

Submitting an EPS is straightforward if you follow these steps:

Log into your payroll software: Ensure it’s RTI-compliant.

Prepare your EPS: Enter the necessary details, including any adjustments, statutory payments, and reliefs you’re claiming.

Check for errors: Review the information for accuracy before submission.

Submit to HMRC: Use your payroll software to submit the EPS directly to HMRC.

Receive confirmation: After submission, you should receive a confirmation message from HMRC. Keep this for your records.

6. Common Mistakes to Avoid

To ensure your EPS submission is successful, avoid these common pitfalls:

Late submission: Missing the 19th of the month deadline can result in penalties.

Incorrect figures: Double-check all amounts, especially when reporting statutory payments or claiming reliefs.

Failure to update software: Ensure your payroll software is up-to-date to avoid compatibility issues with HMRC’s system.

Not submitting when required: Even if you haven’t paid any employees, you still need to submit an EPS to report this.

7. What to Do if You Make a Mistake

If you realize you’ve made an error on an EPS after submission, don’t panic. You can correct the mistake by submitting an amended EPS. This will overwrite the previous submission with the correct details. Ensure you submit the correction as soon as possible to avoid any discrepancies with HMRC.

8. The Impact of Not Submitting an EPS

Failing to submit an EPS when required can have significant consequences. HMRC may issue penalties for late or missed submissions. Additionally, incorrect payments to HMRC could lead to interest charges or fines. Moreover, failing to claim reliefs or report statutory payments correctly could result in overpaying your tax liability, impacting your business’s cash flow.

9. Tips for Staying on Top of EPS Submissions

To ensure you never miss an EPS submission, consider the following tips:

Set reminders: Use calendar alerts to remind you of the 19th of the month deadline.

Automate payroll processes: Leverage payroll software that automates the EPS submission process.

Regularly review payroll data: Monthly checks of your payroll data can help catch any errors early.

Stay informed: Keep up-to-date with HMRC’s guidelines and any changes to the RTI system.

Conclusion

The Employer Payment Summary (EPS) is a vital component of the payroll process for businesses in the UK. By understanding when and how to submit an EPS, you can ensure your business remains compliant with HMRC regulations, avoid penalties, and optimize your payroll processes. Regularly reviewing your payroll data, using compatible software, and submitting on time will help keep your business on track.

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