Why you might need to make a correction
Why the correction should be made the following month
To make the adjustment in your open payroll
Other options
Why you might need to make a correction
Mistakes in payroll are very common and are often due to the payroll department being the last to know about necessary changes. For example;
❎ You weren't told an employee returned from sick leave.
❎ An employee's overtime wasn't approved by their manager on time.
❎ An employee was verbally promised a referral bonus
❎ An employee left after the payroll cut-off.
Why the correction should be made the following month
In most cases, the corrections should be made in the following month, i.e. your open payroll. This is HMRC's preference. This prevents issues such as;
⚠️ Your payments to employees or submissions to HMRC might be delayed.
⚠️ A second submission is sent to HMRC which can result in discrepancies on your HMRC account.
⚠️ Your pension contribution files may need to be manually adjusted in the following month to account for changes after the original pension upload.
⚠️ You'll need to re-run all of your payroll reports.
⚠️ You'll need to re-issue payments to HMRC and your pension provider.
⚠️ If your journals have already been posted, these need to be adjusted manually.
⚠️ Not forgetting the time it takes to process these corrections.
To make the adjustment in your open payroll
The following information explains how to make adjustments in your open payroll, based on the error that occurred.
Employee was underpaid
From the employee's record, click View payslip in the top-right-hand corner.
Make a note of their net pay.
Make the adjustment that was missing from last month's payroll. I.e. adjust the leave, or add in the missed payment.
Click View payslip again and take a look at the new net pay.
Calculate the difference between the old and the new net pay. This can be paid to the employee as an advance outside of the payroll.
So they won't be paid the same amount via the payroll, you should deduct this same amount from their net pay.
To do this, click the Pay items tab, under Additional deductions, click Add a new deduction.
Select Additional deduction from Deduction type.
Change the Name to something similar to 'Advance'.
Enter the amount, then leave the apply this deduction option and the deduction is before tax and NIC toggles as they are.
Click Save regular deduction.
Click View payslip again.
Tip: If you've got this right, the net pay should be as it was in Step 2.
Employee was overpaid
From the employee's record, click View payslip in the top-right hand corner.
Make a note of their net pay.
Make the adjustment that was missing from last month's payroll. I.e. adjust the leave, or deduct the incorrect payment.
Click View payslip again and take a look at the new net pay.
Calculate the difference between the old and the new net pay. This is how much the employee owes to the company. If the employee pays this back before they're next due to be paid, you can add the repayment to their payslip.
To do this, click the Pay items tab, under Additional payments, click Add a new payment.
Select Additional payment from Payment type.
Change the Name to something similar to 'Repaid outside of payroll'.
Enter the amount, then leave the Apply this deduction option as Just once.
Change the Is this payment taxable and Is this payment NI-able to No.
Click Save.
Now click View payslip again.
Tip: If you've got this right, the net pay should be as it was in Step 2.
Other options
On the rare occasion, that it is not practical to make the amendments in the current month, we have the ability to restore your PayFit account back to a few minutes before you ran the payroll that you want to re-open. It means that any changes you entered after this date and time will be lost and you'll need to re-enter them. If it's past your pay date, it means we need to send an extra submission to HMRC which risks causing discrepancies on your HMRC account.