Aligning Your Payroll to the Correct Tax Period

Getting your payroll dates wrong can cause unexpected tax bills for your employees and create unnecessary admin work. The key is making sure the payment date you report to HMRC on your Full Payment Submission (FPS) matches the actual date your employees are paid—not the date you processed the payroll—and falls within the correct tax period.

Understanding tax periods and payment dates

The tax year runs from 6 April to 5 April the following year. Within that, HMRC divides the year into tax months and tax weeks for payroll purposes:

• Tax months run from the 6th of one month to the 5th of the next (for example, tax month 7 runs from 6 October to 5 November)
• Tax weeks follow the same pattern but weekly

When you submit your FPS to HMRC, you must include the date you actually paid your employees—not the date you ran the payroll software. This payment date determines which tax period the payment falls into, affecting how much tax and National Insurance your employees pay.

Common mistakes that cause misalignment

Two situations typically cause payroll misalignment:

You've changed the day you pay employees. If you previously paid staff on the 28th of each month but switch to paying them on the 7th, your FPS dates need to reflect this change.

You've used the wrong date on your FPS. This is the more common error. For example, you run your payroll on 4 October (preparing payslips, calculating deductions) but don't actually pay employees until 7 October. If you report 4 October as the payment date on your FPS, this falls into the previous tax month (which ended on 5 October), creating a mismatch.

How to fix a misaligned payroll

The correction method depends on when you'll next pay your employees relative to the incorrect FPS.

If your next payment is in the same tax period

Send another FPS on or before your employees' next payday with the correct payment date. Treat the figures on this FPS as an extra payment for that tax period.

Be aware: this may mean your employee pays more tax in this period because HMRC will see two payments within the same tax month or week.

If your next payment is in the following tax period

Simply send your next FPS as normal (on or before the employees' payday) with the correct payment date and year-to-date figures. This naturally corrects the misalignment.

If your next payment is in a later tax period

Sometimes when realigning, you might skip one or more tax periods entirely. For example, you ran payroll on 1 June and incorrectly reported this date on your FPS, but you actually paid employees on 7 June. Their next payday is 7 July, which means you won't need to send an FPS for the tax month running from 6 June to 5 July.

However, skipping a tax period creates a National Insurance reporting problem that you must correct separately.

Correcting National Insurance when skipping periods

If you skip a tax month or week, you must send an additional FPS specifically to correct your employees' National Insurance records. Send this FPS at the same time as or after you realign your payroll.

Complete the FPS using these specific values:

• National Insurance category letter: Use the same letter you reported on your last FPS. If you used multiple category letters, send separate FPS reports for each one
• Gross earnings for NICs in this period: Enter 0.00
• Earnings at the Lower Earnings Limit (LEL) year to date: If you pay your employee £112 a week (£486 a month) or more, add their total pay since 6 April to the relevant amount: £112 for weekly pay, £224 for fortnightly pay, or £486 for monthly pay
• Employee contributions payable in this period: Enter 0.00
• Total of employee's contributions payable year to date: Use the same figure as on your last FPS
• Employer's contributions payable in this pay period: Enter 0.00
• Total of employer's contributions payable year to date: Use the same figure as on your last FPS

Keep all other year-to-date entries the same as your last FPS (or if this is the first FPS of the tax year, report only from the most recent tax period).

You'll also need to send an Employer Payment Summary (EPS) for the skipped pay period if you don't send any FPS reports during that period.

Other consequences to consider

Payroll misalignment doesn't just affect reporting—it has real consequences for your employees:

Tax overpayments: Your employee might pay too much tax because of the misalignment. They would need to apply to HMRC for a refund.

P60 discrepancies: Their end-of-year P60 might not match their actual salary. If an employee queries this, explain what happened and provide them with a letter confirming how much you've actually paid them during the year.

Preventing future misalignment

To avoid these issues:

• Always use the actual payment date (when money reaches employees' bank accounts) on your FPS, not the date you processed payroll
• If you change your regular payday, update your payroll system immediately and ensure the new dates are used on all FPS submissions
• Double-check which tax period each payment date falls into before submitting your FPS
• Consider setting a regular payday that falls comfortably within the middle of a tax period to reduce the risk of errors

Sources

• Aligning payroll to the correct tax period

This article provides general guidance based on current HMRC rules. For advice specific to your situation, speak to your accountant.