A reminder about the Earlier Year Update

18 March 2021

Payroll professionals will be aware that, to make amendments to the tax year ending 5 April 2021 and onwards, this should be done using a Full Payment Submission (FPS), and not an Earlier Year Update (EYU). With all of the news from the Budget and the ongoing impacts of coronavirus, it felt timely to remind everybody of this change.

The end of tax year 2020-2021 is nearly upon us, and the February 2021 edition of HMRC’s Employer Bulletin also included mention of this.

In summary, for amendments to tax years ending:

  • 5 April 2018 and earlier – an EYU should be submitted
  • 5 April 2019 – either an EYU or FPS can be submitted
  • 5 April 2020 – either an EYU or FPS can be submitted
  • 5 April 2021 - (from 20 April 2021 onwards) an FPS should be submitted

Where employee National Insurance contributions (NICs) are being adjusted for either 2018-19 or 2019-20, and a negative amount of employee NICs are involved, an FPS can be used in scenarios where no refund is due, or where a refund is due, but an employer is not able to refund their employee. Where an employer is unable to refund their employee, they should submit an EYU and ensure that the NICs refund indicator is set to ‘No’.

In March 2021, there will be an update to Basic PAYE Tools (BPT), which will reflect this change, meaning it will no longer support an EYU for 2020-2021, and subsequent tax years. BPT will remain available for tax year 2019-20 and earlier in-date years.

 


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