RTI filing mistakes that trigger HMRC payroll penalties


 # RTI Filing Mistakes That Trigger HMRC Payroll Penalties


Real Time Information, or RTI, has been with us long enough that most employers treat it as routine. Yet HMRC still issues thousands of payroll penalties every year, and almost all of them come down to a handful of avoidable filing mistakes. Here is what goes wrong, what it costs, and how to keep your submissions clean.


## The FPS deadline: on or before the pay date


The golden rule of RTI is simple: the Full Payment Submission (FPS) must reach HMRC on or before the day you pay your employees. Not the day after, not when payroll gets around to it. On or before.


Late FPS filing is the single most common trigger for penalties. HMRC runs a risk-based approach and sends warning letters first, but repeat offenders get moved into automatic penalty territory. If your payroll software sends the FPS automatically but your payment date shifts, for example when payday falls on a bank holiday, check the submission went with the right date. A misaligned payment date is one of the quietest ways to end up filing "late" without realising it.


## The penalty bands for late filing


For employers with more than 50 employees, penalties are charged monthly and scale with headcount:


- 1 to 9 employees: £100 per month

- 10 to 49 employees: £200 per month

- 50 to 249 employees: £300 per month

- 250 or more employees: £400 per month


Smaller employers filing quarterly also face penalties, and these apply per tax quarter rather than per month. Late payment of the PAYE liability itself attracts a separate set of penalties, starting at 1% and rising to 4% depending on how many defaults occur in the tax year. Filing and payment are two different obligations, and you can be penalised for either independently.


## Common RTI errors that cause trouble


### Wrong starter and leaver codes


Every new starter needs the correct starter declaration, and every leaver must be reported on the FPS for their final pay period. Getting the starter statement wrong, for example ticking the wrong option when someone has a second job, usually means the wrong tax code, underpaid tax, and a corrective submission. Missing leavers are worse: HMRC keeps the employment record open, which creates phantom liabilities and confused employees at year-end.


### Payment dates that do not match reality


HMRC compares your reported payment date with when the money actually moved. Regular payments, like salary paid on the last working day, should be straightforward. Irregular payments, bonuses, advances, and directors' drawings need care. If you tell HMRC a payment happened on the 30th but it cleared on the 2nd, you have created a discrepancy that may need an Earlier Year Update or a correction.


### Forgetting the EPS when nothing is paid


If you pay no employees in a tax month, or if you need to recover statutory payments or claim Employment Allowance, you must file an Employer Payment Summary (EPS). Many directors of small companies discover this the hard way: they take no salary for a few months, file nothing, and then receive a penalty notice for a missing return. An EPS takes minutes and closes the gap.


### Incorrect year-to-date figures


Your payroll software carries year-to-date totals on every FPS. If a correction is posted in the wrong period, the YTD figures drift and HMRC's records no longer match yours. Reconciling your payroll software totals against your HMRC online account at least quarterly catches this before it compounds.


### Not correcting errors promptly


Mistakes happen. What HMRC penalises is leaving them uncorrected. Use the FPS correction process in the same tax year, or an Earlier Year Update once the year has closed. A self-corrected error is a very different thing from one HMRC discovers first.


## A monthly payroll compliance checklist


Build RTI discipline into the payroll routine itself:


- Confirm the FPS is submitted on or before every pay date, including bank-holiday-adjusted paydays

- Report starters with the correct declaration and leavers on their final FPS

- File an EPS for any month with no payments, or when claiming allowances

- Reconcile PAYE, NIC, and statutory payment totals to the HMRC online account quarterly

- Diary the PAYE payment deadlines: the 19th for postal and 22nd for electronic payments

- Correct any known errors in the same tax year where possible


## When to get help


Payroll penalties are almost always cheaper to prevent than to pay. If RTI submissions are being squeezed into the gaps between other work, or if you have had a warning letter already, that is the time to review how payroll is resourced. An outsourced payroll support (https://finexoutsourcing.com/) arrangement gives you a dedicated team whose whole job is getting the FPS out on time, the codes right, and the corrections filed promptly.


At Finex Outsourcing (https://finexoutsourcing.com/), we run UK payroll and RTI compliance for small and mid-sized employers, handling submissions, reconciliations, and HMRC correspondence so penalties never get the chance to start. Whether you keep payroll in-house or hand it over, the rule is the same: file on time, file accurately, and correct fast. HMRC rewards all three.

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