What is an EYU?
An EYU is a payroll submission that you need to send to HMRC, either to correct an employee’s
payroll data from a previous tax year, or to provide previously unreported pay information
for employees from a previous tax year. The purpose of this video is to highlight
the key points you’ll need to know when you complete an EYU. This will help avoid
payroll errors and any related problems with employees’ pay and deductions.
So when do you need to complete an EYU? Well, you need to submit an EYU if you are
late in sending your final report for the tax year, or if you are correcting an earlier
submitted report and it is after the 19th April. Please note: If it is on or before the 19th April you can correct the payroll error on
a Full Payment Submission (an FPS) But if it is after the 19th April and you
need to correct an employee’s payroll you should send an Earlier Year Update (an EYU).
It is very important that when you complete the EYU it should show the difference between
your last report and the final figures for the tax year.
For example, your last report shows a pay figure of £20,000 and a tax deducted figure
of £4,000. But your final correct figures for the year should actually be a pay figure
of £22,000 with a tax deducted figure of £4,400. So your EYU should show the difference, in
other words £2,000 as the difference in the pay figure and £400 as the difference in
the tax deducted, and these are the figures you need to send to HMRC.
However this is different if you use HMRC’s Basic PAYE Tools (BPT) as this will calculate
the difference from the figures you originally entered on BPT.
You can also use BPT if your payroll software cannot send an EYU.
Further guidance on using BPT with other software can be found on the GOV.UK website.
What if you need to send another EYU for the same employee?
If you need to make a further correction for the same employee you will need to send another EYU. For example, if you have already submitted
an EYU to amend a year end pay figure of £20,000 to £22,000, the difference of £2,000 would
have been submitted on the first EYU. If you then realise the final pay figure should
actually have been £21,000, you would need to generate a further EYU showing minus £1,000
as the pay figure, and minus £200 as the tax deducted figure.
Here’s an important note about National Insurance corrections on Earlier Year Updates.
If you reported too much National Insurance you also need to set the ‘NIC refund indicator’
to yes or no. You should put ‘yes’ if you deducted the
right amount of National Insurance from your employee but reported it to HMRC incorrectly
– you should do this even if no refund is due.
You should also select ‘yes’ if you refunded your employee after you deducted too much
National Insurance from their pay. You should only select ‘no‘ if you owe
your employee a refund that you have not paid. This could be for example because they have
left your employment, and you expect HMRC to refund them from the payment you have already
made to HMRC, based on the original return. Please note that if you use commercial payroll
software you should follow any instructions it provides for submitting your EYU and always
update your software to make sure you are using the latest version.
Further guidance on payroll annual reporting and tasks can be found here on the GOV.UK website Thanks for watching.