Make corrections for a payroll leaver

This article explains how to make payroll corrections after an employee has left the business.

The steps to take depend on the type of corrections you need to make. These include:

• Removing an employee’s leaving date if it was submitted to HMRC in error
   
• Adding an employee’s leaving date if it was missing from the payroll submission
   
• Corrections to an employee’s payslip after a leaving date has been submitted to HMRC
   
• Corrections to the payslip of an employee who left in month 12

Please see below for details on each scenario. You’ll need full (level 8) access to your FreeAgent account to follow the steps below.

Removing an employee’s leaving date if it was submitted to HMRC in error

If you’ve added a leaving date and sent it to HMRC in error, you can edit the payroll profile and select ‘Remove leaving date’ before you file the next month’s payroll.

Please note that this button will only be available if you haven’t yet filed the following month’s payroll to HMRC and the leaving date wasn’t sent to HMRC in month 12, the final pay period of the tax year.

Adding an employee’s leaving date if it was missing from the payroll submission

When an employee stops working for the business, you need to add a leaving date to their payroll profile in order for FreeAgent to create a P45 for them.

If the employee’s leaving date was missing from the last payroll submission of their employment, you can edit their payroll profile and add their leaving date after the submission. You can also edit their payslips if you need to make any corrections to their pay or deductions. This will send the leaving date and any amended year-to-date figures to HMRC when you file the next pay period.

If the employee left in month 12 and the leaving date was missing from the month 12 submission, you can edit their payroll profile and add their leaving date to create a P45 for them. Make sure to add the leaving date before 19th April if you need to make any corrections. You’ll also need to add the leaving date to the employee’s payroll profile in the next tax year and send it to HMRC in the month 1 submission.

Corrections to an employee’s payslip after a leaving date has been submitted to HMRC

If the wrong pay or deductions have been reported for an employee who has stopped working for you, HMRC advises to send the corrections with your next payroll submission. 

If you have not yet sent the following month’s payroll to HMRC, edit the payroll profile and remove the leaving date by selecting ‘Remove leaving date’ before you file the next month’s payroll.

Please note that this button will only be available if you haven’t yet filed the following month’s payroll to HMRC and the leaving date wasn’t sent to HMRC in month 12, the final pay period of the tax year.

This will allow you to edit the employee's payslips and correct their year-to-date figures. When submitting next month’s payroll, include the employee’s original leaving date in their payroll profile and use emergency tax code ‘Week1/Month1’ when relevant. Please note that:

• there needs to be a paid employee included in the next month's submission for FreeAgent to send an FPS which includes the correct year-to-date figures.
  
   
• edits to earlier payslips in FreeAgent will not automatically recalculate later payslips. You’ll need to open the payslip and save it for FreeAgent to calculate the Income Tax and National Insurance if needed.

The current guidance from HMRC indicates that it is fine to remove the leaving date as long as the P45 has not been issued to the employee. However, as FreeAgent produces the P45 digitally as soon as the leaving date is entered in the payroll profile, the employee may have accessed the P45. Therefore, you would need to decide if it is correct to remove the leaving date.

When the leaving date is removed, the original P45 will no longer be available. Once you have made the necessary changes and added the original leaving date back in their payroll profile, FreeAgent will generate a new P45 for the employee.

We recommend that you save a copy of all the employee’s payslips and P45 before editing the figures as it won’t be possible to view the original figures in FreeAgent once they’ve been updated.

Alternatively, if you don’t want to remove the leaving date, or if you have filed a subsequent payroll period, you’d need to add the employee as a new user and create a new payroll profile for them. Find out more about how to add a returning employee to payroll.

If you’re unsure whether or not removing the leaving date is the correct thing to do, please speak to your accountant or HMRC.

Corrections to the payslip of an employee who left in month 12

Once a leaving date has been added to an employee’s payroll profile and submitted to HMRC, it won’t be possible to edit any historical payslips for the employee.

If the wrong pay or deductions has been reported for an employee who left in month 12, please email support@freeagent.com and our Support team can update the employee's payslips for you. The corrections can then be filed with HMRC after 19th April.

We recommend that you save a copy of all the employee’s payslips before we edit the figures as it won’t be possible to view the original figures in FreeAgent once they’ve been updated.