Pay As You Earn (PAYE) is the system HMRC uses to collect Income Tax and National Insurance from employees' pay, and Real Time Information (RTI) is the way you report that pay to HMRC every time you run payroll. This guide explains how PAYE and RTI work for the 2026-27 tax year (6 April 2026 to 5 April 2027), what each submission carries, the deadlines you must meet, and how to fix things when they go wrong.
What is PAYE?
PAYE, which stands for Pay As You Earn, is HMRC's system for collecting Income Tax and National Insurance contributions (NICs) directly from employees' wages as they are paid. As an employer you deduct the right amount of tax and NICs from each payment, add your own employer's National Insurance and any other liabilities, and pay the total over to HMRC. The amount of tax you deduct depends on each employee's tax code, while National Insurance depends on their NI category letter and how much they earn relative to the thresholds for the year. PAYE also handles other deductions made through payroll, such as student and postgraduate loan repayments. Operating PAYE is a legal obligation for almost every employer, and RTI is the method by which you tell HMRC what you have deducted.
What is Real Time Information (RTI)?
Real Time Information means you submit information about your PAYE payments to HMRC throughout the tax year as part of running your payroll, rather than only once at the end of the year. In practice, every time you pay your employees you send HMRC an electronic return that reports their pay, the tax and National Insurance deducted, student loan deductions, and various year to date totals. RTI submissions are sent as XML messages filed over the internet. The two returns you will use most are the Full Payment Submission (FPS) and the Employer Payment Summary (EPS).
What is a Full Payment Submission (FPS)?
A Full Payment Submission is the main RTI return and the one you send every time you pay your employees. It tells HMRC who you paid, how much, and what you deducted, and it must be sent on or before each payday. The FPS reports each employee's taxable pay, the Income Tax deducted, National Insurance contributions, student and postgraduate loan deductions, statutory payments such as maternity or paternity pay, and a set of year to date figures that build up across the tax year. It also carries your employer references and details of any starters and leavers. Because it is filed in real time, the FPS is what HMRC uses to keep each employee's tax record up to date and to calculate what you owe for the month.
What information does an FPS report?
The FPS is built around three things: who you are, who you paid, and what you deducted. At employer level it carries your HMRC Office Number, your Employer PAYE Reference and your Accounts Office Reference, plus the tax year. At employee level it carries identity details such as National Insurance number, name, address, date of birth and gender, along with starter information (start date, starter declaration and student loan plan type) and leaver information where relevant. For the payment itself it reports the payment date, pay frequency, tax week or month number, the tax code used, taxable pay, tax deducted, National Insurance by category letter, student and postgraduate loan deductions, and statutory payments. Many of these figures are reported both for the pay period and as a cumulative year to date total, so HMRC always holds the running position for each employee.
When must I send the FPS?
You must send the FPS on or before the day you pay your employees. This on or before rule is the cornerstone of RTI: the submission should reach HMRC on payday at the latest, and ideally before the money lands in the employee's account. The payment date you put on the FPS is the date the employee is contractually due to be paid, or the date you actually pay them, depending on the circumstances. Sending late without a valid reason can lead to a late filing penalty, so building the FPS into your normal payday routine is essential.
What is an Employer Payment Summary (EPS)?
An Employer Payment Summary is the RTI return you send to report things that do not belong on an FPS, mainly amounts that reduce what you owe and adjustments to your monthly liability. You do not send an EPS every time you pay people; you send it monthly only when you have something to tell HMRC that the FPS cannot carry. Typical reasons include claiming the Employment Allowance, recovering statutory payments, reporting Apprenticeship Levy due, telling HMRC you have made no payments in a period, or reporting Construction Industry Scheme (CIS) deductions suffered.
What does an EPS carry?
The EPS carries the items that adjust your overall PAYE liability rather than individual employee pay. The main things it reports are: the Employment Allowance indicator used to claim the annual allowance against your employer secondary National Insurance; recovered statutory payments and the associated National Insurance compensation (covering maternity, paternity, adoption, shared parental, parental bereavement and neonatal care pay); the Apprenticeship Levy due year to date with the tax month and your annual levy allowance; a no payment for period indicator and dates; a period of inactivity for future months with no paid employees; CIS deductions suffered where you are a limited company subcontractor; bank account details so HMRC can refund you if your recoverable amounts exceed what you owe; and the final submission indicators used at year end or when your scheme ceases.
What is the deadline for sending an EPS?
You should send your EPS so that it reaches HMRC by the 19th of the month following the tax month it relates to. Tax months run from the 6th of one calendar month to the 5th of the next, so an EPS for the tax month ending 5 May should be sent by 19 May. Sending the EPS on time matters because it is what reduces your liability for the month; if you claim a recovery or the Employment Allowance after HMRC has already worked out what you owe, your account may show a balance you did not expect.
How do I claim the Employment Allowance through RTI?
The Employment Allowance is an annual allowance that eligible employers offset against their employer (secondary) Class 1 National Insurance bill. You claim it by setting the Employment Allowance indicator on an EPS to Yes. You must check that you are eligible before claiming, and HMRC does not send confirmation that your claim has been accepted. Once made, the claim is retained for the full tax year, so you do not need to claim again each month, but you do need to make a fresh claim at the start of each new tax year. For 2026-27 the allowance is up to 10,500 pounds; see the dedicated article on employer allowances for the eligibility rules.
What is the Apprenticeship Levy and when do I report it?
The Apprenticeship Levy is a charge on employers with a large enough pay bill, reported through the EPS rather than the FPS. If it applies to you, you report the Apprenticeship Levy due year to date along with the tax month and your annual levy allowance on an EPS. Once you start reporting the levy you must continue making EPS submissions for the rest of the year. The levy is 0.5% of the pay bill, only paid by employers with an annual pay bill over 3 million pounds, with a 15,000 pound annual allowance to offset.
What are recovered statutory payments and CIS deductions suffered?
When you pay employees statutory payments such as maternity, paternity, adoption, shared parental, parental bereavement or neonatal care pay, you can usually recover a percentage of those payments, and smaller employers may also receive National Insurance compensation on top. You report these recovered amounts on the EPS as year to date figures by tax month, and they reduce the PAYE you owe. Separately, if you are a limited company working as a subcontractor under CIS, contractors will have deducted CIS amounts from your payments; you report these as CIS deductions suffered on the EPS so they can be set against your PAYE liabilities. If your recoveries and CIS deductions together exceed what you owe, you can supply bank details on the EPS for a refund.
What is a nil payment or no payment EPS?
A no payment for period EPS tells HMRC that you have paid no employees in a tax month and therefore have no FPS to file. You must send it within 14 days of the end of the tax month, so for the month running 6 April to 5 May you would send it by 19 May. Without this EPS, HMRC will expect an FPS and may estimate that you owe PAYE for the month, which can lead to incorrect charges. If you know in advance that you will have no paid employees for one or more whole future tax months, you can instead report a period of inactivity on the EPS.
What happens if I pay employees early, before a weekend or bank holiday?
If you pay employees earlier than usual, for example because payday falls on a weekend or bank holiday, you should normally report the employees' contractual or usual payday on the FPS rather than the earlier date you actually paid them, and you must still send the FPS on or before the date you make the payment. Reporting the regular payday helps protect employees who receive benefits such as Universal Credit, because it avoids two months' pay appearing in a single assessment period. The key point is that the FPS still needs to be filed on or before the day the money leaves your account.
What happens if I report or pay late?
If you report a payment after the date it was actually paid, your FPS lets you attach a late reporting reason explaining why. HMRC provides a fixed list of reason codes, including a reasonable excuse code and a code for a correction to an earlier submission. You should only use a late reporting reason where one genuinely applies, and supply it against each late reported payment. Reporting late without a valid reason can trigger a late filing penalty, and paying HMRC late can trigger a separate late payment penalty plus interest, so the two should not be confused: one relates to the submission, the other to the cash.
How do late filing penalties work?
Late filing penalties apply when you do not send your FPS on or before payday without a valid reason, or fail to send an expected EPS. HMRC generally allows one unpenalised late submission per tax year and bases the penalty on the number of employees in the scheme, with monthly penalties rising as the workforce grows. There is usually a short grace period of a few days after payday, but you should not rely on it. To avoid penalties, send the FPS on or before each payday, send a no payment EPS by the 19th when you have paid no one, and check the current penalty bands on GOV.UK.
How do late payment penalties work?
Late payment penalties are separate from late filing penalties and apply when you do not pay the PAYE you owe by the due date. They are charged as a percentage of the amount paid late, and the percentage can increase the more often you pay late within a tax year, with additional penalties for amounts unpaid after a longer period. Interest is also charged on late paid PAYE from the due date until you pay. Make sure HMRC has cleared funds by the deadline each month or quarter, and confirm the current figures on GOV.UK.
When do I have to pay HMRC the PAYE I owe?
You must pay HMRC the PAYE and National Insurance you owe for each tax month by the 22nd of the following tax month if you pay electronically, or by the 19th if you pay by post or cheque. Tax months run from the 6th to the 5th, so for the month ending 5 May the electronic deadline is 22 May and the postal deadline is 19 May. If the 22nd falls on a weekend or bank holiday, your electronic payment must clear by the last working day before it. Paying electronically is strongly recommended and is the default for most employers.
Can small employers pay HMRC quarterly?
Yes. Employers whose average monthly PAYE liability is less than 1,500 pounds can choose to pay HMRC quarterly rather than monthly, which can ease cash flow. The quarterly periods end on 5 July, 5 October, 5 January and 5 April, and the same timing rules apply, so the electronic deadline is the 22nd after the end of the quarter and the postal deadline is the 19th. You still send your FPS and any EPS on the normal monthly schedule even if you pay quarterly; the quarterly option only affects when you hand over the money, not when you report.
What are the Employer PAYE reference and the Accounts Office reference?
These are the two identifiers HMRC issues when you register as an employer, and both appear on your RTI submissions. Your Employer PAYE Reference is made up of your three digit HMRC Office Number, then a forward slash, then your employer reference, for example 123/A246. Your Accounts Office Reference is a separate 13 character reference in the format 123PA00045678, found on the letter Paying PAYE electronically or on the Employer Payment Booklet. The HMRC Office Number, Employer PAYE Reference and Accounts Office Reference are all required on every FPS and EPS, so record them accurately in your payroll software.
What is the Government Gateway, the sender ID and GOV.UK One Login?
To file RTI you authenticate with HMRC's online services, and your payroll software signs each submission using your credentials. Historically this is a Government Gateway user ID (sometimes called the sender ID) and password, obtained when you enrol for PAYE Online for employers. HMRC is moving users towards GOV.UK One Login as the single sign on for government services, so depending on when you set up access you may sign in through One Login rather than the older Government Gateway screens. Keep these credentials secure and up to date, because without valid authentication HMRC will reject your FPS and EPS.
What is the difference between a test and a live submission?
RTI supports both test and live submissions so software and processes can be checked without affecting your real PAYE record. The message that wraps every RTI submission contains a test flag that marks it as a test rather than a live filing. Test submissions are validated by HMRC in the same way as live ones, so they are useful for confirming that your data passes validation, but they do not update employees' tax records or create a liability. You should never rely on a test submission to meet a filing deadline, because only a live submission counts as having reported your payroll.
What is the first FPS I send for a brand new PAYE scheme?
When you set up a new PAYE scheme and run payroll for the first time, your first FPS establishes your employees' records with HMRC. On it you report each employee with their starter information, including start date and starter declaration (statement A, B or C), and their student loan plan type where relevant, along with their identity details. If an employee has no National Insurance number, include at least two lines of their address and you can send a National Insurance number Verification Request. As with every FPS, it must be sent on or before the first payday and must carry your employer references.
How do I correct a mistake on an FPS?
Because the FPS reports cumulative year to date figures, the most common fix for an error found within the same tax year is to put it right on your next regular FPS, since the corrected year to date totals carry the right position. If you need to correct a period you have already reported and cannot wait, you send an additional FPS for that period with the corrected year to date values, and where the corrected payment is reported after the event you can use the late reporting reason for a correction to an earlier submission. The guiding principle is that the FPS always reflects the true year to date position.
How do I correct a mistake after the tax year has ended?
If you discover an error after the tax year has closed, you generally correct it by sending an amended FPS for the relevant year, reporting the corrected year to date figures. The submission must relate to the correct tax year, because the related tax year on the submission has to align with the period covered. Corrections to a prior year are time sensitive and the available method can change, so check the current GOV.UK guidance on correcting payroll for an earlier tax year before you file.
What is the final submission of the tax year?
Your final submission of the year is the last RTI return for the tax year, telling HMRC you have finished reporting. You make it by setting the final submission indicator, either on your last FPS of the year or on an EPS if your last FPS has already gone. Make sure all your figures for the year are complete and correct before sending it, because it signals to HMRC that the year is done. After year end you also provide each employee with their P60 summarising their pay and deductions.
What do I submit if my PAYE scheme is closing?
If you are stopping as an employer and paying your employees for the last time, you tell HMRC by marking your final submission as being because the scheme has ceased. You set the scheme ceased indicator, enter the date the scheme ceased, and enter a leaving date for all employees on the final FPS. The date the scheme ceased must be in the tax year to which the final submission relates. This lets HMRC close your PAYE scheme cleanly and stop expecting further returns, so make sure all outstanding pay and deductions are reported correctly first.
How do the FPS and EPS work together each month?
In a normal month, the FPS reports what you paid your employees and the EPS reports the adjustments that reduce or change what you owe, and HMRC combines them to work out your liability. You send an FPS on or before every payday during the month, building up the year to date figures, and then, if you have anything to declare such as Employment Allowance, recovered statutory payments, CIS deductions suffered or Apprenticeship Levy, you send an EPS by the 19th of the following month. If you paid no one at all, you send a no payment EPS instead. HMRC takes your FPS totals, subtracts the recoveries and allowances on your EPS, and arrives at the amount you must pay by the 22nd electronically or the 19th by post.