How to correct a payroll mistake after you’ve submitted your FPS

You've run payroll, the Full Payment Submission (FPS) has gone to HMRC, and then you spot it: someone was overpaid, a tax code was wrong, or a new starter's details don't match. Every employer does this at some point. The good news is that RTI has a defined correction route for almost everything, and most fixes are less dramatic than they feel.

The one rule that makes everything simpler

HMRC reconciles payroll against year-to-date figures, not individual payments. Each FPS reports cumulative totals for the tax year, and the latest year-to-date figures HMRC receives are the ones that count. That means most mistakes are fixed simply by reporting corrected year-to-date figures — either in your next regular FPS, or in an additional FPS sent sooner. You're not "cancelling" or "recalling" the wrong submission; you're superseding it.

Scenario 1: you reported the wrong pay or deductions

If the amounts on the FPS were wrong (or you paid the wrong amount and the FPS faithfully reported it), you have two options:

• Fix it in your next regular FPS. Update the year-to-date figures to the correct values and carry on. For most mistakes caught within the same tax year, this is all HMRC expects.
• Send an additional FPS before then. If you don't want to wait — say the error affects the employee's universal credit or you underpaid someone and are topping them up now — send another FPS with the corrected year-to-date figures.

HMRC's own guidance on this is at gov.uk — fix problems with running payroll.

Scenario 2: you overpaid an employee

Correct the reporting as above, then recover the money. UK employment law treats genuine overpayment of wages as one of the few cases where an employer can deduct from future pay without a prior written agreement — but barrelling ahead is a good way to damage trust and, if the employee has spent the money in good faith, can get legally murky. Talk to the employee first and agree a repayment plan in writing, especially if the amount is large enough that clawing it back in one go would cause hardship.

Scenario 3: you used the wrong tax code

If HMRC has issued a new code you missed, apply it from the next pay run. Because most UK tax codes are cumulative, PAYE self-corrects: the next calculation looks at total pay and total tax for the year to date, so any over- or under-deduction from earlier periods washes out automatically. The exception is week 1 / month 1 codes, which don't look backwards — any correction for past periods then comes from HMRC's side, usually after year end or via a revised code.

Scenario 4: wrong National Insurance category

NI is not cumulative, so this one doesn't self-correct. Recalculate the employee's NI for the affected periods under the right category letter, report the corrected year-to-date NI figures (split by category) on your next FPS, and refund or collect the difference through payroll. If the employee overpaid, the refund comes from you and you recover it from HMRC by paying less over; if they underpaid, be aware there are limits on how much extra NI you can deduct in any one period.

Scenario 5: wrong employee details

Wrong name spelling, date of birth, or address: just correct it in your payroll records and the fix flows through on the next FPS. The critical thing is to keep the same payroll ID. Deleting the employee and re-adding them, or changing their payroll ID without flagging it properly, is how duplicate employment records are born — and duplicated employments are the classic cause of employees being chased for tax they don't owe. If you've been using the wrong NI number entirely, correct it on the next FPS rather than leaving it blank.

Scenario 6: the FPS itself is late

An FPS is due on or before payday. If you've missed it, send it as soon as you can with a late reporting reason code. HMRC doesn't usually penalise the first late filing in a tax year, or reports within three days of the deadline; beyond that, monthly penalties apply on a sliding scale by employer size (currently £100 for 1–9 employees up to £400 for 250+). The current rules are at gov.uk — if you don't report payroll information on time.

What about mistakes in a previous tax year?

For tax years from 2020/21 onwards, earlier-year corrections are also made by FPS: you send a further FPS for the earlier year with the corrected year-to-date figures (the old Earlier Year Update, or EYU, is no longer accepted for those years). Year-end mistakes are worth handling promptly, because they feed the employee's P60 and HMRC's end-of-year reconciliation.

The cheaper fix: catch it before the FPS exists

Every scenario above gets dramatically easier if it's caught before payday — before the FPS is sent, before the bank file is generated, before anyone is paid the wrong amount. That's the reason PayAdjust splits payroll into a preview step and a finalise step: employees see their payslip before payday and flag anything that looks wrong while it's still a one-click fix rather than a correction cycle. The FPS goes to HMRC once, correctly.

This guide is general information, not tax or legal advice. Penalty amounts and HMRC processes change — check the linked gov.uk guidance for the current rules.