In some cases, incorrect figures have been reported to HMRC due to a series of cancellations and manual payments.
To resolve this issue, we have outlined potential causes along with steps to fix them based on the identified problems.
Mistakes in manual payments
When issuing manual payments, always verify the figures and pay codes included in the payment.
If you find that the figures are incorrect and the manual payment comes after a cancellation for the same payroll period, issue another manual payment to correct the reported figures. Identify the incorrect figure and adjust it (either positively or negatively) as necessary.
Missing tax and NI in manual payments
Manual payments do not automatically calculate PAYE and National Insurance (NI) due. If your discrepancy relates to tax or NI, ensure that these amounts are manually added to the payment. The same procedure applies to pensions.
If figures are incorrect and the manual payment follows a cancellation for the same payroll period, issue another manual payment to correct the reported figures. Identify the incorrect figure and adjust it as needed.
Incorrect pay code configuration
Check the configuration of pay codes in your manual payments. Ensure the pay codes are marked as Taxable or Non-Taxable, based on what was reported incorrectly. Adjust the configuration accordingly.
If the issue stems from a faulty pay code configuration, modify it to reflect the correct taxability. Then, rerun a manual payment to report the accurate figure.
Analysis code mismatch
An analysis code may conflict with a pay code's taxability configuration. Make sure the correct analysis code is assigned to each pay code. For instance, if a pay code is taxable, it should have a corresponding taxable analysis code.
If a pay code is configured as taxable but assigned a non-taxable analysis code (like analysis code 8000 for Nett Pay or analysis code 4000 for non-taxable pay), the analysis code will take precedence, resulting in the figure not being reported as taxable to HMRC.
If you discover an incorrect analysis code, change it to the correct one and then proceed with the manual payment.
Additional tips
For manual payments in a previous tax year, run a Previous Year FPS in test mode. Verify the figures and only proceed in live mode if everything checks out.
For the current tax year, the corrected figure will be included in the next FPS sent to HMRC.
If the issue persists after checking all possible causes, please raise a new case online. Reference this article's title and include the following details:
A description of all checks performed.
Screenshots displaying the configurations mentioned in this article.
The manual payment report.
The FPS showing the figures reported to HMRC.
A spreadsheet with calculations.
Employee number.
Payroll period (in numbers).
Company name.
Pay group of the affected employee.