Most employers understand the importance of submitting a Full Payment Submission (FPS) whenever they pay employees. However, many businesses are less familiar with another important payroll report: the Employer Payment Summary (EPS).
An Employer Payment Summary is a report submitted to HMRC through the Real Time Information (RTI) system when employers need to report adjustments that cannot be included in a Full Payment Submission. HMRC uses EPS information to calculate what an employer owes and to account for reliefs, recoveries, and periods where no payments have been made to employees.
While not every payroll period requires an EPS, understanding when and how to use one is essential for maintaining payroll compliance and ensuring your PAYE account remains accurate.
Why Does HMRC Use Employer Payment Summaries?
HMRC introduced RTI to receive payroll information throughout the year rather than waiting until year-end. An FPS tells HMRC what employees have been paid and which deductions have been made. However, some payroll adjustments sit outside the normal employee payment process.
This is where the EPS becomes important.
The Employer Payment Summary allows employers to report additional information that may affect the amount they owe HMRC, including statutory payment recoveries, Employment Allowance claims, Construction Industry Scheme deductions and periods where no employees have been paid.
Without an EPS, HMRC may assume payroll liabilities are higher than they actually are.
What is the Difference Between FPS and EPS?
This is one of the most common payroll questions.
Full Payment Submission (FPS)
An FPS reports:
- Employee pay
- Income Tax deductions
- National Insurance deductions
- Student loan deductions
- Statutory payments paid to employees
- Starter and leaver information
Employers submit an FPS every time employees are paid. HMRC requires employers to submit the FPS on or before payday.
Employer Payment Summary (EPS)
An EPS reports:
- Statutory payment recoveries
- Employment Allowance claims
- CIS deductions suffered
- Periods with no employee payments
- Other PAYE adjustments
Unlike the FPS, employers only submit an EPS when they need to report specific adjustments.
Simple Comparison
Think of it this way:
- The FPS tells HMRC what you’ve paid employees.
- The EPS tells HMRC about adjustments to what your business owes.
Both reports play an important role in RTI payroll compliance.
When Should Employers Submit an EPS?
Not every payroll period requires an EPS. However, employers must submit one when certain situations arise.
No Employees Have Been Paid
If no employees receive payment during a tax month, employers may need to submit an EPS to inform HMRC that no payroll activity occurred. HMRC generally expects the EPS to reach them by the 19th of the following tax month.
Claiming Employment Allowance
Many eligible employers reduce their National Insurance liability by claiming Employment Allowance. An EPS is used to notify HMRC that the business wishes to claim the allowance.
Recovering Statutory Payments
Employers may be entitled to recover certain statutory payments through payroll.
Examples can include statutory family-related payments reported through the payroll process. HMRC uses EPS information to offset these recoveries against PAYE liabilities.
Construction Industry Scheme (CIS) Deductions
Businesses that suffer CIS deductions can report them through an EPS so HMRC can account for the amounts correctly.
What Information Does an EPS Include?
The exact content depends on why the EPS is being submitted.
However, employers commonly use an EPS to report:
- Employment Allowance claims
- Statutory payment recovery
- CIS deductions suffered
- Months with no employee payments
- Adjustments affecting PAYE liabilities
HMRC uses the information to update the employer’s PAYE account and calculate the correct amount payable.
What Happens if an EPS is Not Submitted?
Failure to submit an EPS when required can result in discrepancies between payroll records and HMRC’s calculations.
For example, if an employer qualifies for Employment Allowance but does not submit an EPS, HMRC may not apply the allowance correctly to the PAYE account.
Similarly, if no employees were paid during a tax month and HMRC does not receive an EPS, the employer may receive unnecessary correspondence or payment demands because HMRC assumes reporting is missing.
Therefore, reviewing EPS requirements as part of every payroll cycle is important.
Common Employer Mistakes with EPS Reporting
Many payroll professionals focus heavily on FPS submissions and overlook the EPS.
Common issues include:
Assuming Every Payroll Period Requires an EPS
Most payroll periods only require an FPS. An EPS is only necessary when specific circumstances apply.
Missing Employment Allowance Claims
Employers sometimes forget to notify HMRC that they wish to claim Employment Allowance. As a result, potential savings may not be reflected correctly on the PAYE account.
Forgetting Nil Payment Periods
Where no employees are paid during a tax month, employers may need to submit an EPS. Failure to do so can create unnecessary HMRC follow-up activity.
Filing Late
Like other RTI processes, EPS submissions operate within deadlines.Late reporting can create reconciliation issues and administrative complications.
How Does Payroll Software Handle EPS Reporting?
Most modern payroll software simplifies the process significantly.
Typically, payroll systems can:
- Generate EPS reports automatically
- Track Employment Allowance claims
- Record statutory payment recoveries
- Submit information directly to HMRC
- Maintain submission confirmations
However, payroll software still depends on accurate setup and informed payroll administration. Consequently, employers should ensure payroll teams understand when an EPS is required and verify submissions regularly.
Why Is EPS Reporting Important for Payroll Compliance?
Payroll compliance is about more than calculating employee pay. Employers must ensure HMRC receives complete and accurate information about payroll activity and payroll liabilities.
The EPS helps achieve this by reporting information that would otherwise sit outside standard payroll calculations.
Without accurate EPS reporting:
- PAYE liabilities may be incorrect
- Reliefs may not be applied
- HMRC records may contain discrepancies
- Unnecessary administrative work may arise
As payroll compliance becomes increasingly digital, maintaining accurate RTI reporting remains essential.
Should SMEs Outsource EPS Reporting?
Many SMEs manage payroll successfully using payroll software. However, payroll legislation and reporting obligations continue to become more complex.
As businesses grow, payroll teams must manage:
- FPS submissions
- EPS submissions
- Workplace pensions
- Benefits in Kind
- PAYE compliance
- HMRC correspondence
Consequently, many organisations choose a fully managed payroll service to reduce risk and ensure all payroll reporting obligations are completed correctly.
Need Help with HMRC Reporting?
At PayCheck, we help businesses manage every aspect of payroll compliance, including FPS submissions, EPS reporting, workplace pensions, PAYE administration, and HMRC compliance.
With nearly 30 years of payroll expertise, support for 1,500+ UK businesses, and our industry-leading 3 Ring Promise, we help employers stay compliant while reducing payroll administration.
Contact PayCheck today to discuss your payroll reporting requirements and discover how a fully managed payroll service can support your business.
Insights from Payroll Master
Lee Baldwin | Director of Managed Services
Employer Payment Summary (EPS) FAQs
What does EPS stand for in payroll?
EPS stands for Employer Payment Summary. It is an RTI report submitted to HMRC to report payroll adjustments, recoveries, allowances, or periods with no payroll activity.
Do I need to submit an EPS every month?
No. Employers only submit an EPS when specific circumstances apply, such as claiming Employment Allowance, recovering statutory payments, reporting CIS deductions suffered, or notifying HMRC that no employees were paid.
What is the difference between FPS and EPS?
An FPS reports employee pay and deductions, while an EPS reports adjustments that affect the employer’s PAYE position.
Can I submit both an FPS and an EPS?
Yes. Many employers submit FPS reports during normal payroll processing and submit an EPS when adjustments or claims need reporting.
When should an EPS be submitted?
If required, HMRC generally expects the EPS by the 19th of the following tax month so appropriate adjustments can be applied to PAYE liabilities.
Can payroll software submit EPS reports automatically?
Most modern payroll software supports EPS generation and electronic submission to HMRC. However, employers remain responsible for ensuring information is accurate.
