Introduction
If an employee receives a payment for a previous pay period, HMRC allows for the national insurance contributions, student loan deductions and week1 month 1 tax calculations to be adjusted so that they are calculated as if that payment was processed during the correct, previous, pay period.
The purpose of this document is to describe how this feature is used within InPay. Further information is available in chapter 3 of the CWG2 document - https://www.gov.uk/government/publications/cwg2-further-guide-to-paye-and-national-insurance-contributions.
Mistimed payments can only be used in periods where the worker has no pay at all. Any payment, no matter how small, makes that period unavailable for mistimed payments
The 2 most common scenarios where the functionality will be used are as follows
- A new starter receives their first payment for more than one period.
- A worker submits their timesheet late through the InTime Timesheet application
The InTime integration functionality is enabled only after you have submitted a request to the support team.
Before you request this functionality to be enabled it is vitally important that you review your pay period and timesheet dates. You must ensure that your timesheet dates fall into the correct InPay pay period and that you take corrective action. Failure to do so will potentially cause calculation issues.
Mistimed payments are not available to umbrella clients utilising dispensation or where the employee pays the employer’s pension.
It should be noted that in some situations an employee may be worse off when mistimed payments are enabled.
SCENARIO 1
A new employee starts work on 15 June and is due to be paid monthly on the last day of each month. The earnings period is monthly and the first pay day is 31 July (mistimed payments). The employee receives £2,250 gross pay which is made up of: £750 for the period 15 June to 30 June and £1,500 for the period 1 July to 31 July.
- Add the payment of £2250 to InPay as you would normally
- Add £750 to the employee mistimed payments screen for month 3
Above shows the National Insurance and tax (because the worker is on week1\mth1 code) based on a monthly payment of £750
Resultant Payslip
After generating the FPS file it shows that 2 Periods Covered
SCENARIO 2
A worker submits their timesheet late through the InTime timesheet application Two separate weeks’ wages for weeks ending 12June and 19 June are paid on 24 June. InPay will add a row to the screen below for the period ending 16th June (period 201611). The 2 weeks pay will be calculated separately for NI, Student Loan and Tax (because it is a wk1\mth1 code) purposes.
