1. Late FPS submissions

The most common payroll mistake. The FPS must be submitted on or before the pay date — not after. Late FPS triggers automatic penalties. Schedule payroll runs to give yourself buffer.

2. Wrong tax code

Using the wrong tax code (e.g. emergency code when HMRC has issued a new one, or carrying over an old code) leads to under- or over-deduction. Check tax code notices in PAYE Online weekly.

3. Missing leaver dates

When an employee leaves, mark their leaving date on the FPS in the same period. If you forget, HMRC may continue to expect FPS reports for them, and you may issue P45s late.

4. Wrong employee NI category

NI categories aren't all the same. Apprentices under 25, employees under 21, and veterans have different categories with different employer NI thresholds. Using "A" when "M" or "H" applies costs money.

5. Missing the Employment Allowance claim

Eligible employers can claim Employment Allowance to reduce their employer NI bill. It needs an annual EPS to claim. Many small businesses miss it.

6. Not running a "no payment" EPS

If you have no payments in a tax month but are still an active employer, you must submit a "no payment" EPS. Otherwise HMRC assumes you owe and starts chasing.

7. Pension auto-enrolment errors

Auto-enrolment pension contributions are separate from but interact with payroll. Common errors: not enrolling eligible jobholders, getting opt-out periods wrong, miscalculating contributions on bonus pay.

8. P60 timing

P60s must reach employees by 31 May after the tax year end. Late P60s are a common compliance failure. Schedule the year-end run early.

How to fix mistakes

Wrong figure on a past FPS: submit a correcting FPS for that period
Missed a leaver date: submit an amended FPS with the leaver date
Wrong tax code applied: HMRC will reconcile at year-end via P800, but employees can ask to update mid-year
Missed Employment Allowance: submit an EPS to claim it

Common payroll errors