Understanding Employment Payment Summary in FreePayroll

What is an Employment Payment Summary (EPS)?

The EPS serves as a mechanism to report certain items to HMRC that can reduce the amount of PAYE liability that you owe. Key items reported through EPS include statutory pay recoveries (like Statutory Maternity Pay or Statutory Sick Pay), the Construction Industry Scheme deductions suffered, and the employment allowance which reduces employer National Insurance contributions. Also this submission is relevant, if you are on a period that you are not going to pay any employee.

Automatic EPS Submissions

FreePayroll is designed to automate the process of sending your Employment Payment Summary to HMRC to simplify compliance:

- Automatic Submission Timing: The software automatically sends EPS to HMRC every 18th of the month. This ensures that any recoverable amounts such as statutory maternity or sick pay and adjustments like employment allowance are reported in a timely manner. Note that the deadline to this submission, is the 19th of every month. If you fail to submit payroll before this date, than this will not be reported in the correct tax month, and you may be unable to reduce your PAYE liability for that month.

- Employment Allowance Consideration: During the automatic EPS submission, the software also indicates whether or not to consider the employment allowance for that tax month, helping manage your NI contributions efficiently.

Manual EPS Submission

For additional flexibility, FreePayroll allows you to manually submit a no payment EPS if there are months where no payments to employees were made or other adjustments need to be reported outside the automated cycle:

Navigating the Submission:
- Go to the Reports section in FreePayroll.
- Click on HMRC Submissions.
- Select the Employer Payment Summary section.

Manual Submission: From here, you can manually submit an EPS to report a no payment EPS.

Why EPS Matters

Submitting an accurate EPS on time ensures that you correctly report recoverable amounts and adjustments, thereby maintaining compliance with HMRC requirements and ensuring that your business does not overpay on taxes and contributions. It also helps in better cash flow management by ensuring that any employment allowance or other recoverables are accounted for promptly.

Updated on: 09/10/2024