Running payroll in the UK means playing by HMRC's Real Time Information rules — whether you employ one member of staff or one hundred. Since RTI became mandatory for all employers in April 2013, businesses have been required to report pay and deductions to HMRC on or before each payday, rather than once a year at the end. It sounds straightforward, but the mechanics of exactly what to submit, when to submit it, and what to do when things go wrong trip up thousands of small businesses every year. This guide cuts through the jargon and gives you a clear, practical understanding of RTI payroll.
What Is RTI and Why Does It Matter?
Real Time Information (RTI) is HMRC's system for collecting payroll data digitally, in real time, throughout the tax year. Before RTI, employers submitted an end-of-year return — a P35 — summarising all pay and deductions. The problem was that HMRC often didn't find out about tax underpayments or benefit overpayments until months after the fact.
RTI changed all of that. Now, every time you pay an employee — whether weekly, fortnightly, or monthly — you must tell HMRC at the same time. This feeds directly into the Universal Credit system and allows HMRC to adjust tax codes in near-real time. For employees, it means fewer surprise tax bills. For employers, it means the consequences of getting payroll wrong are much faster to materialise.
The two primary submission types under RTI are the Full Payment Submission (FPS) and the Employer Payment Summary (EPS). Understanding the difference between them is the foundation of compliant payroll.
The Full Payment Submission (FPS): Your Core Payroll Return
The Full Payment Submission is the document you send to HMRC every time you pay your employees. It must be submitted on or before the date your employees actually receive their pay — not when you process payroll, not the next working day. On or before payday.
An FPS includes the following information for each employee paid in that period:
- Name, National Insurance number, and date of birth
- Gross pay for the period and year-to-date figures
- Income Tax deducted (PAYE)
- Employee and employer National Insurance contributions
- Student loan deductions, if applicable
- Any statutory payments made — Statutory Maternity Pay (SMP), Statutory Sick Pay (SSP), and so on
- A starter or leaver declaration if the employee's status has changed
That last point is worth emphasising. When you take on a new employee, their starter declaration (replacing the old P46) must be included in the first FPS you submit for them. When someone leaves, the leaver date must appear on the FPS for their final pay period. Forget either of these and HMRC's records will be incorrect, which often means your former employee ends up on the wrong tax code in their next job.
One common scenario for small employers: you process payroll on the 25th but pay your staff on the last working day of the month. The FPS must be sent by that last working day — not the 25th. HMRC's systems look at the payment date declared on the FPS, so always ensure that date reflects when money actually hits employee bank accounts.
The Employer Payment Summary (EPS): When You Need to Say More
Where the FPS reports what you paid your employees, the Employer Payment Summary is used to report adjustments to what you actually pay HMRC. An EPS does not replace an FPS — it works alongside it.
You submit an EPS when any of the following apply:
- No employees paid in a period: If you haven't paid anyone in a tax month, you must send an EPS by the 19th of the following month to tell HMRC not to expect payment. Failure to do this results in HMRC raising a "specified charge" — essentially a bill based on previous payroll figures.
- Statutory payment reclaims: Small employers (those with an annual NI liability of £45,000 or less) can reclaim 103% of Statutory Maternity Pay, Statutory Paternity Pay, and similar payments. These reclaims are declared on the EPS.
- Employment Allowance: If you're claiming the Employment Allowance — currently worth up to £10,500 per tax year from April 2025 — you must activate this claim via an EPS at the start of the tax year. You don't need to resubmit it every month, but you must renew it each year.
- CIS deductions suffered: If you're a limited company that has had Construction Industry Scheme (CIS) deductions taken from payments you received, you can offset these against your PAYE liability using the EPS.
The EPS deadline is the 19th of the month following the tax month it relates to. Tax months run from the 6th to the 5th — so the EPS for the tax month ending 5 May must reach HMRC by 19 May.
Deadlines, Penalties and Common Mistakes
HMRC takes late or missing RTI submissions seriously. The penalty regime for late FPS filings works on a sliding scale based on the number of employees in your PAYE scheme:
- 1–9 employees: £100 per month
- 10–49 employees: £200 per month
- 50–249 employees: £300 per month
- 250 or more employees: £400 per month
HMRC does apply a degree of leniency for the first late submission in a tax year, but don't rely on that. In addition to FPS penalties, if you persistently send inaccurate submissions, HMRC can charge a further penalty of up to 30% of the unpaid tax.
The most common mistakes small employers make include: submitting the FPS after payday; forgetting to send a nil EPS when no one has been paid; using the wrong National Insurance category letter; and failing to include new starters on their first payroll run. Each of these can lead to cascading issues — incorrect tax codes, underpaid NI, or HMRC raising an unexpected charge against your PAYE account.
Platforms like BizHub365 help prevent these mistakes by automating FPS and EPS submissions directly to HMRC's API — no bridging software required. When you run payroll, the correct submission is generated and sent automatically, with confirmation logged against each pay run. For small employers managing payroll alongside everything else a business demands, that kind of built-in safeguard is genuinely valuable.
Additional RTI Submissions You Should Know About
Beyond the FPS and EPS, there are a handful of other RTI-related submissions worth being aware of:
- Earlier Year Update (EYU) / Amended FPS: If you discover an error in a previous tax year's payroll, you can correct it using an amended FPS (for the current year) or, in some cases, an Earlier Year Update for prior years.
- P60: At the end of each tax year (5 April), you must provide every employee still in your employ with a P60 — their annual summary of pay and deductions. This isn't submitted to HMRC but must be issued to employees by 31 May.
- P45: Issued to leavers when they stop working for you. The leaver information is included in the FPS, but you must also give the employee their paper or digital P45 promptly.
Auto-enrolment is also closely tied to payroll. If you employ anyone aged 22 or over earning above £10,000 per year, you're legally required to enrol them into a qualifying workplace pension scheme. Contributions must be calculated each pay period and paid to the pension provider — typically within 22 days of the month end for electronic payments.
Getting RTI Right: A Practical Checklist for Small Employers
Before each pay run, work through the following:
- Confirm the payment date and ensure your FPS will be submitted on or before that date.
- Check for new starters and ensure their starter declaration is completed correctly.
- Check for leavers and confirm their final pay and leaving date are accurate.
- Review any statutory payments to be made this period and ensure they're reflected on the FPS.
- If no one is being paid this period, schedule an EPS to be sent by the 19th of the following month.
- Confirm your Employment Allowance claim is active for the current tax year.
- Reconcile your PAYE liability against your HMRC online account monthly to catch any discrepancies early.
RTI payroll doesn't have to be stressful. Once you understand the rhythm of FPS and EPS submissions — and the deadlines that govern them — it becomes a manageable, predictable part of running your business. The key is consistency: submit on time, every time, and correct errors promptly when they occur. If you're currently managing payroll manually or through disconnected spreadsheets, it's worth exploring dedicated payroll software that handles HMRC submissions directly, so you can spend less time worrying about compliance and more time running your business.