What’s the difference between RTI, FPS and EPS payroll submissions?
Please note that:
- FreeAgent's payroll functionality won't be available if you have an unincorporated landlord account or if you're preparing your accounts using the cash accounting basis
- FreeAgent currently only supports monthly payroll
Real Time Information (RTI)
Employers need to report wages, salaries, PAYE and National Insurance (NI) to HMRC in real time. RTI stands for Real Time Information and is the blanket name for the payroll submissions that are filed with HMRC (FPS and EPS). Find out more about how FreeAgent supports RTI.
Real Time Information (RTI) applies to anyone who is registered for PAYE or needs to be. This means that if you employ staff or you work through a limited company that pays you a salary, RTI applies to you. However, if you’re a sole trader or a partnership and don’t employ staff, then RTI does not apply to you.
If you’re unsure whether RTI applies to you, please ask your accountant. You might also want to check out HMRC’s guidance.
Full Payment Submission (FPS)
Every time an employer pays an employee, they need to submit a Full Payment Submission (FPS) to HMRC to notify them of any updates to the pay or tax for an employee. Please note that FreeAgent currently only supports monthly payroll.
The following information is included on each FPS submission to HMRC:
- A positive value of pay to an employee (i.e. not a nil payslip)
- The tax year which the FPS relates to
- The employee’s PAYE details (e.g pay date, gross pay to date, tax to date, tax code and other relevant deductions)
- Payment dates
- The employee’s National Insurance contributions (not Employer contributions)
- Starter/leaver information
- Student loan indicators
- Employee Pension contributions (not Employer contributions)
If you submit payroll to HMRC using FreeAgent, you’ll see confirmation of the Full Payment Submission in the ‘Payroll Summary’ panel in FreeAgent.
Employer Payment Summary (EPS)
An Employer Payment Summary (EPS) is only required if an employer needs to submit any of the following information:
- To declare the recovery and compensation of statutory absences (Statutory Sick Pay (SSP) is not included)
- To declare Construction Industry Scheme (CIS) deductions suffered (this only applies to limited companies, as sole traders don’t pay themselves via payroll)
- If the employer has not paid any of the employees within the tax month but wishes to keep the payroll scheme open (i.e. a nil value payslip for existing employees or nil payroll if the employees have left)
Please note that if an employer submits nil payroll for several months, HMRC will sometimes close down the payroll scheme. If this happens, you’ll need to contact HMRC to ask them to re-open it.
- To declare that the Employer's National Insurance Allowance scheme (Employment Allowance) is being used. HMRC doesn’t require the amounts being claimed for the Employment Allowance, they only need notification of whether it is being claimed or not.
An EPS is not required to declare the tax and National Insurance deductions of employees, as this is included on the FPS submission.
FreeAgent will submit an EPS every month to HMRC when you run payroll to indicate whether or not the Employment Allowance is being claimed. You’ll see confirmation of the Employer Payment Summary in the ‘Payroll Summary’ panel in FreeAgent.
If you're paying employees, an FPS and EPS submission can be submitted from the beginning of the month. For example, if you’re filing Month 1 payroll, this can be submitted from 1st April.
If you're not paying employees and try to submit an EPS before the beginning of the tax month, e.g before 6th April if you’re filing Month 1 payroll, you’ll receive an error message. You’ll then need to go back into the payroll month after the beginning of the tax month and run the payroll again to file the EPS submission.