I Forgot to Submit Payroll Last Month, What Happens Now

Running payroll is one of the most time sensitive tasks a business carries out. HMRC requires an RTI submission every time you pay an employee, including directors. If you forget to submit payroll for a month the mistake feels alarming but it is fixable. HMRC systems are designed to accept late submissions and most issues can be corrected within a few minutes once you know what to do.

This article explains what happens behind the scenes when payroll is missed, what HMRC expects, how to correct the problem, whether penalties apply and how to manage knock-on effects such as overpaid or underpaid tax. Whether you run a small company, a charity, a community group or a growing business you will understand exactly how to deal with a missed payroll.

Understanding What HMRC Requires Each Month

Before looking at missed deadlines it helps to understand how payroll works under Real Time Information.

Real Time Information (RTI)

RTI requires employers to send payroll information to HMRC every time they pay staff. This includes:

• pay

• tax

• National Insurance

• pension deductions

• statutory payments

There are two key RTI submissions:

1. Full Payment Submission (FPS)
   Sent on or before the employee’s pay date. This tells HMRC the exact pay for the period.

2. Employer Payment Summary (EPS)
   Sent only when you reclaim statutory payments or need to adjust your bill.

Missing the FPS is the issue that causes problems. HMRC uses the FPS as proof that employees were paid on time and that tax is up to date.

What Happens When You Forget to Submit Payroll

1. Your payroll does not exist in HMRC’s system for that month

If no FPS is submitted HMRC assumes you either:

• paid no one
  or

• paid staff but failed to report it

HMRC understandably dislikes missing information because it affects tax, NI and employee records.

2. HMRC may generate an estimated charge

HMRC may create a default estimated charge called a “Specified Charge.”
This is an automatic estimate of what HMRC believes you should have paid.

It is not a penalty. It is an estimated tax bill created so HMRC can keep your account active. Once your late FPS is submitted the estimated charge is replaced with the correct figures.

3. Your PAYE account may show overdue amounts

Your online account may show:

• a late payment

• an overdue balance

• a specified charge

Do not panic. The amounts will correct once you submit the missing FPS.

4. Employees may see issues with their tax records

Until the FPS is submitted:

• their tax records do not update

• their year-to-date pay may look wrong

• they may receive emergency tax adjustments

Submitting the late FPS fixes this.

Will HMRC Penalise You for Submitting Payroll Late

Maybe, but not always. HMRC’s penalty system considers frequency, business size and history.

Late Filing Penalties

HMRC may charge a penalty if:

• you submit your FPS late
  and

• there is no reasonable excuse

Penalty amounts vary:

• £100 per month for small employers (1 to 9 employees)

• £200 per month for 10 to 49 employees

• £300 per month for 50 to 249 employees

• £400 per month for 250 employees or more

Most small businesses and directors with a one-person payroll fall into the £100 band.

Will HMRC always charge it

In practice HMRC does not automatically penalise very small employers for an occasional mistake. HMRC often applies leniency when:

• it is your first late filing

• the employer has a good compliance history

• the payroll is only for a director

• the delay is short

• you correct the issue quickly

HMRC “first offence” concession

HMRC grants a one-off penalty waiver for the first late filing in a tax year.
If you have not already used this you will not be penalised.

What You Should Do Immediately

Step 1: Run payroll for the missed month

Open your payroll software and run payroll exactly as it should have been processed.

Step 2: Submit the FPS with the original pay date

This is the most important step.

Use the actual pay date for that period not today’s date.
HMRC can see that it was submitted late but using the correct pay date keeps year-to-date figures accurate.

Step 3: Check if you need to submit an EPS

If you:

• reclaim statutory payments

• claim Employment Allowance

• need to adjust NI

• need to recover CIS deductions

your software may require an EPS.

Step 4: Pay any PAYE owed

If your PAYE bill is now overdue pay it as soon as possible. Late payment penalties are separate from late filing penalties.

Step 5: Check your PAYE online account

Log in to:

• confirm the late FPS has overwritten the specified charge

• check for penalties

• ensure your account balance is correct

Corrections usually appear within a few days.

What If You Realise You Forgot Payroll for Multiple Months

This happens more often in small director-only companies.

If you forgot 2 or 3 months

Submit each month one at a time in correct order with the proper pay dates.
HMRC will update your records and remove all estimated charges.

If you forgot half a year

Still correct it the same way but consider speaking with an accountant to ensure NI cumulative calculations are accurate.

If you missed an entire tax year

You must submit late FPS submissions for each month.
HMRC may send penalty notices but they can be appealed with a reasonable excuse if circumstances justify it.

Reasonable Excuses HMRC Accepts

HMRC may waive penalties if you provide a reasonable excuse.
Valid excuses include:

• serious illness

• bereavement

• technical failure of payroll software

• HMRC system issues

• fire or flood

• unexpected events outside your control

HMRC does not accept:

• forgetting

• being too busy

• staff absence

• not understanding the rules

However even without a formal excuse penalties are often not issued for first-time errors.

What Happens to Employee Tax and NI When Payroll Is Late

When payroll is missed HMRC cannot update employees’ tax records. This may cause:

• temporary incorrect tax codes

• missing NI contributions on personal records

• year-to-date differences

• incorrect student loan or pension tracking

Submitting the late FPS resolves all of these automatically.

There is no impact on the employee as long as you correct it promptly.

What If I Only Pay Myself as a Director

If you are the only employee:

• missing payroll is common

• HMRC is more lenient

• penalties are less likely

• the company still needs an FPS for each month salary is paid

If you missed the month entirely and took no salary for that period you can either:

• submit an FPS showing £0 pay
  or

• skip the period entirely and resume next month

Your accountant can confirm which option suits your director pay strategy.

Does Missing Payroll Affect Dividends

No. Dividends have nothing to do with payroll.
You can still declare dividends as long as sufficient profit exists.

However if your company has a salary and dividend strategy missing payroll may affect:

• NI credits

• mortgage evidencing

• reported income

Submitting the late FPS corrects this.

How to Fix Underpayments or Overpayments After a Missed Payroll

If you underpaid tax or NI

Your next payroll will adjust automatically or you can update figures manually through payroll software.

If you overpaid

Your FPS submission corrects the year-to-date totals and HMRC updates your account.

If you paid the employee correctly but forgot the submission

Submit the FPS with the original pay date. Nothing else is needed.

Will HMRC Contact You If Payroll Is Missed

Yes. HMRC often sends:

• late filing warnings

• specified charge notices

• PAYE reminders

These letters are automated and do not indicate penalties unless stated.

Once your late FPS is submitted these messages usually stop.

Real World Examples

Example 1: Missed payroll for one month

A director forgets to run payroll for October.
She runs the payroll in November, backdates the pay date to October and submits the FPS.
HMRC removes the specified charge and does not issue a penalty.

Example 2: Missed payroll due to illness

A small firm forgets to run payroll after the owner is hospitalised.
Payroll is submitted three weeks late.
A penalty notice arrives but is cancelled when the owner provides evidence of illness.

Example 3: Three missing months

A charity forgets to run payroll for three months because their volunteer treasurer leaves.
They submit all three months at once.
HMRC updates the PAYE account and no penalty is issued due to previous good compliance.

Example 4: One person director company

A director pays themselves £758 per month and forgets June payroll.
They submit June a month late.
HMRC does not penalise because this is the first late filing in the tax year.

How to Appeal a Penalty if One Is Issued

If HMRC issues a penalty you can appeal through:

• your HMRC online PAYE account

• a written letter

• your accountant

In your appeal include:

• why the payroll was late

• what steps have been taken to fix it

• evidence if applicable

• confirmation the FPS has now been submitted

HMRC often removes penalties if the reason is valid and the employer has a good record.

How to Prevent Missed Payroll in Future

1. Set automated reminders

Calendar alerts prevent accidental oversight.

2. Use outsourcing if you struggle

Many businesses outsource payroll because it reduces risk.

3. Run payroll at the same time every month

Consistency makes it difficult to miss.

4. Use payroll software with automatic submission prompts

Modern systems warn you if an FPS has not been sent.

5. Keep clear director pay strategies

If you pay yourself small regular salaries, automation helps keep it consistent.

Conclusion

Forgetting to submit payroll last month is fixable and far more common than people realise. HMRC allows late FPS submissions and usually removes any estimated charges once the correct data is received. Penalties are not guaranteed especially for small employers or first-time mistakes. The important thing is to run payroll with the correct original pay date, submit the FPS promptly and check your PAYE account.

With clear processes, reliable software and regular reminders you can avoid missed submissions in the future. The key is to address the issue quickly and ensure your payroll and RTI records stay accurate and compliant.