Understanding the Importance of the Employer Payment Summary
The Employer Payment Summary, known as the EPS, is a payroll submission sent to HM Revenue and Customs that adjusts an employer’s Pay As You Earn liability for a given tax month. It does not contain individual employee data; that information is sent to HMRC via the Full Payment Submission, which is submitted on or before each payday. The EPS operates at the employer level and tells HMRC either that no wages were paid in a period, or that specific credits and reclaims should reduce the amount the employer owes. These adjustments include reclaims for statutory payments such as maternity and paternity pay, claims for the Employment Allowance, offsets for Construction Industry Scheme deductions, and declarations of Apprenticeship Levy liability. When submitted accurately and on time, the EPS ensures that an employer pays only what is genuinely owed for that tax month, rather than the gross PAYE figure generated by their payroll submissions alone.
A Practical Guide to the Employer Payment Summary
Running payroll in the UK involves more than simply calculating wages and distributing payslips. It requires regular, accurate communication with HMRC through a system known as Real Time Information, under which payroll data must be submitted at the point wages are paid rather than at the end of the year.
For most employers, the primary submission in this process is the Full Payment Submission. But the FPS alone does not tell the complete story. If an employer has paid statutory maternity pay, claimed the Employment Allowance, suffered CIS deductions as a subcontractor, or simply not paid any staff in a given month, a separate submission is required to bring HMRC’s records into alignment with reality. That submission is the EPS.
Understanding when to send it, what it covers, and how to correct it when something goes wrong is a core part of payroll compliance for any UK employer.
The FPS and the EPS: Two Complementary Submissions
The FPS and the EPS serve different but complementary functions within the Real Time Information framework. Confusing the two is one of the more common sources of payroll compliance issues for new employers, so the distinction is worth establishing clearly.
The Full Payment Submission is the primary payroll report. It must be sent on or before the day employees are paid and contains detailed, employee-level data: names, National Insurance numbers, gross pay, income tax deductions, National Insurance contributions, student loan deductions, pension contributions, and any new starter or leaver details. It tells HMRC what wages were paid and what was deducted from employees’ pay during that pay period.
The Employer Payment Summary is a supplementary submission. It contains no individual employee data and is not sent on a fixed payday schedule. Instead, it is sent when an employer needs to communicate something at the business level: a reclaim against the PAYE bill, a nil period declaration, or a statutory reporting obligation. Where the FPS tells HMRC what the employer owes based on payroll activity, the EPS tells HMRC what should be deducted from that figure.
If both are submitted correctly and on time, the amount showing as due on the employer’s PAYE account should match precisely what the payroll software calculates as payable. Discrepancies between the two are almost always the result of an EPS that was not sent, was sent late, or contained incorrect figures.
The Submission Deadline
The EPS must be submitted to HMRC by the 19th of the month following the tax month to which it relates. The UK tax month runs from the 6th of one calendar month to the 5th of the next. An EPS covering the period from 6 May to 5 June must therefore be submitted no later than 19 June.
Missing this deadline does not prevent the submission from being sent, but it does mean that the adjustments it contains will not be applied to that tax month’s PAYE bill. The employer will need to pay the higher, unadjusted amount and wait for the submission for the following month to rebalance the account. For employers reclaiming significant amounts of statutory pay, a missed deadline can have a meaningful short-term cash-flow impact.
When to Submit an EPS
The EPS is not required every month in every circumstance. An employer who has submitted an FPS, has no statutory payments to reclaim, no CIS deductions to offset, and has already declared their Employment Allowance for the year does not need to send an EPS for that period. The FPS alone is sufficient.
However, several situations do require an EPS, and failing to recognise them is a common source of compliance gaps.
Nil payment periods are one of the most important. If no employees were paid during a tax month, no FPS needs to be sent. HMRC still expects to hear from the employer, and the mechanism for doing so is an EPS with the no-payment indicator selected. Without this, HMRC may estimate a tax charge for the period or issue a late filing penalty. A nil EPS provides the formal confirmation that the absence of a payroll submission was intentional, not an oversight.
Statutory payment reclaims are another primary reason to submit. When an employee takes statutory maternity leave, paternity leave, adoption leave, shared parental leave, or parental bereavement leave, the employer funds the payments from its own cash flow and is entitled to reclaim most or all of the costs from HMRC. Standard employers can reclaim 92% of statutory payments made. Employers who qualify for Small Employers’ Relief, specifically those whose total Class 1 National Insurance liability in the previous tax year was £45,000 or less, can reclaim 100% of the statutory payments plus an additional 3% compensation for the associated National Insurance costs, bringing the total reclaim to 103%. These reclaim amounts are calculated in the payroll software and transmitted to HMRC via the EPS, thereby directly reducing the monthly PAYE liability.
Employment Allowance is claimed through the EPS. The Employment Allowance is a government scheme that allows eligible businesses to reduce their annual employer National Insurance liability by up to £5,000. Claiming it requires no separate application: the employer selects the Employment Allowance indicator in their payroll software and sends an EPS to notify HMRC. Once confirmed, the allowance is applied automatically against each month’s employer NICs liability until the full £5,000 has been used. This indicator only needs to be submitted once per tax year, typically at the start of April.
CIS deductions suffered apply to limited companies working as subcontractors under the Construction Industry Scheme. When a contractor deducts CIS tax from payments to a subcontractor, the deductions are paid to HMRC on the subcontractor’s behalf. The subcontracting company can offset those deductions against its own PAYE, NICs, and student loan liabilities rather than waiting for a year-end repayment. The EPS is the vehicle through which the subcontractor reports the total CIS deductions suffered and claims that offset. Without it, the business would effectively be taxed twice on the same income throughout the year.
Apprenticeship Levy declarations are required from large employers with an annual pay bill exceeding £3 million. These employers are liable for the levy at a rate of 0.5% of their total pay bill, with an annual allowance of £15,000 to offset the cost. The monthly levy liability and the allocated allowance are both reported to HMRC through the EPS. This is not an optional submission for affected employers; it is a mandatory monthly obligation.
Reconciling Your PAYE Account
Regular reconciliation between the employer’s payroll records and HMRC’s account is one of the most important practices in payroll administration, and the EPS sits at the centre of that process.
After each payroll run, the payroll software generates a P32 report summarising the total tax and National Insurance liability for the period. This figure represents the gross PAYE amount before any EPS adjustments. Once the EPS has been submitted and processed, the employer’s HMRC digital tax account should reflect the adjusted amount after reclaims and credits are applied.
Logging into the HMRC PAYE Online account after each EPS submission and comparing the figure shown there with the payroll software’s P32, net of any EPS deductions, provides a direct confirmation that the submissions have been received and applied correctly. A discrepancy typically points to one of three things: an EPS that was not sent, one that missed the deadline and therefore was not applied to that month, or one that contained an error. Identifying and resolving these gaps early prevents them from accumulating into a more complex year-end reconciliation problem.
Correcting Errors
Errors in an EPS submission are correctable, and the mechanism for doing so is more straightforward than many employers expect.
EPS figures are cumulative for the tax year to date rather than representing a single period in isolation. This means that if an error is identified in an earlier month, it does not always require a corrected submission for that specific month. Instead, the cumulative year-to-date figures can be corrected in the payroll software and transmitted in the following month’s EPS, which will overwrite the previous totals and bring the HMRC account back into alignment.
If an error is identified before the 19th of the current month, the most straightforward resolution is to amend the figures and send a corrected EPS before the deadline. HMRC will apply the most recently received submission. If the error is identified after the 19th, the correction carries forward to the next period through the cumulative totals, provided the underlying payroll records are updated accurately.
Maintaining a clear internal record of any adjustments made and the reasons for them is advisable, both for internal audit purposes and in case of a future HMRC compliance check.
The Final Submission for the Tax Year
At the end of each tax year on 5 April, employers are required to formally declare to HMRC that their payroll reporting for the year is complete. This is done by selecting the final submission indicator in the payroll software and submitting the final EPS for the year, which must be sent to HMRC by 19 April.
This declaration matters because it triggers HMRC’s process of finalising employees’ tax records for the year, which feeds into their personal tax accounts and any associated benefit entitlements. Failing to make the final submission declaration on time delays that process and can create problems for employees when they come to file their own returns or access tax-related services.
The year-end EPS should capture any remaining statutory pay reclaims, CIS deduction offsets, or Apprenticeship Levy adjustments that were not included in earlier submissions. It should also reflect the final cumulative year-to-date totals across all relevant categories.
Late Filing Penalties
HMRC operates an automated penalty system for late Real Time Information submissions. Employers who miss the 19th deadline for an expected EPS, including nil payment declarations, are at risk of receiving a penalty notice, though HMRC typically allows a three-day informal grace period before issuing one.
Penalties are calculated based on the size of the employer’s workforce. Employers with one to nine employees face a penalty of £100 per month for late submissions. Those with ten to forty-nine employees face £200 per month, employers with fifty to two hundred and forty-nine employees face £300, and those with two hundred and fifty or more employees face £400. An additional penalty of 5% of the tax and National Insurance that should have been reported may apply where a submission is more than three months overdue.
Penalties can be appealed where a genuine reasonable excuse exists, such as a serious IT failure, a fire, or a sudden serious illness. Administrative reasons such as forgetting or misunderstanding the system are not accepted as grounds for appeal. Consistent use of automated payroll software, with submissions scheduled in advance and built-in deadline reminders, is the most reliable way to avoid penalties altogether.
The Role of Payroll Software
The practical management of EPS submissions is considerably easier with software that integrates directly with HMRC’s Real Time Information infrastructure. Good payroll software calculates statutory pay reclaim amounts automatically, prompts the user to send a nil EPS when no FPS has been submitted in a given period, tracks the Employment Allowance balance as it is consumed across the year, handles CIS deduction calculations for eligible businesses, and maintains a digital record of all submissions, including confirmation receipts from HMRC, as evidence of compliance.
For businesses that manage payroll manually or use disconnected systems, the risk of missed submissions, miscalculated reclaims, and reconciliation errors is considerably higher. Investing in software that handles RTI submissions natively removes much of the administrative risk from the process and provides a reliable audit trail.
A Submission That Protects Cash Flow
The EPS is easy to overlook because it sits alongside the more prominent FPS and does not contain the employee-level data that most people associate with payroll. But its financial significance is real. Every statutory payment reclaim it carries reduces the cash leaving the business for that month. Every Employment Allowance credit it activates saves on employer National Insurance. Every CIS deduction offset it records prevents a construction business from being taxed twice on income it has already had deducted.
Getting the EPS right, on time and with accurate figures, is one of the more concrete ways that payroll compliance directly supports business finances rather than simply satisfying a regulatory obligation.
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