Say goodbye to the Earlier Year Update

29 November 2018

The EYU will cease to be a valid submission from April 2020.

From the 20 April 2019, HMRC will extend the use of the RTI Full Payment Submission (FPS) to allow employers to continue to report revised year to date payment data after the deadline of 19 April.

This measure has long been awaited since RTI was rolled out and it will replace the current process used where an inaccuracy in payroll data has been identified after the end of the Tax Year but has not been corrected before the 19 April. Currently, in this instance, HMRC requires an employer to submit an Earlier Year Update (EYU) to correct the account. This process involves the employer calculating the difference between the original submission and the correct position for each employee by submitting the difference (the delta amount) on an EYU.

HMRC will be extending the use of the RTI Full Payment Submission (FPS) to allow employers to continue to report revised Year to Date (YTD) payment data after the current deadline of the 19th April, from April 2019, however, the EYU will still be accepted for the 2018-19 tax year.

The aim is to simplify the process by removing unnecessary complexity and will align HMRC systems and employer payroll records sooner. During the transition year, employers will need to choose one of these methods for amendments and continue with this for any further amendments to the year as required.

From April 2020 the EYU will no longer be a valid submission to make an amendment to the Tax Year ending 05 April 2020 and any amendments will need to be made using an FPS.

Timetable summary

  • Amendments to the Tax Year ending 05 April 2019 from 20 April 2019 – an EYU or FPS will be accepted. This is to be a pilot year and the use of the FPS after the year-end will be voluntary.
  • Amendments to the Tax Year ending 05 April 2020 (and future years) from 20 April 2020 – will be made by the submission of an FPS
  • Amendments to Tax Years ending 05 April 2018 and earlier – will be made by the submission on an EYU

The Employer Payment Summary (EPS) will not be impacted by this change.

From 20 April 2020 onwards HMRC’s Basic PAYE Tools software will be updated to allow customers to submit FPS’s for the year ending 5 April 2020 and onwards, to report any amendments.

HMRC do not anticipate that any changes will be made to the format of the FPS when it is used after the 19 April following the year-end. The FPS will provide an update to the last period reported, with a matching or later pay date for the individual, to indicate a change in the year to date figures.

CIPP comment

This welcome improvement has been long awaited and whilst it will not remove the challenge created for employers and HMRC by duplicate payments, it is in this space where it is hoped that greater clarity will be provided.