Annual PAYE schemes for once a year payments

If you pay all your employees only once a year, and all in the same tax month, HMRC will let you register as an annual scheme. You then send a Full Payment Submission only in the month you pay, pay the PAYE for that month on the normal timetable, and do not need to send nil Employer Payment Summaries for the other eleven months. It is most often used by small companies that pay a director a single salary or fee each year.

Who can register an annual scheme?

HMRC’s Running payroll guidance says that if you pay your employees only once a year, and all in the same tax month, you can register with HMRC as an annual scheme, which means you send reports and make payments annually. Both conditions have to be met. A company that pays its director in March and a part time bookkeeper monthly cannot use it, because the bookkeeper is paid in other months.

The same guidance says that if you pay employees on different days within the same tax month, that is still acceptable, but you must send an FPS on or before each payday. Tax months run from the 6th of one month to the 5th of the next, so a payment on 4 March falls in tax month 11 and a payment on 10 March falls in tax month 12.

How do I register?

You contact the HMRC employer helpline and tell them which month you pay your employees. HMRC ask for your 13 character Accounts Office reference number, which is on the letter HMRC sent when you first registered as an employer. Our guide to employer PAYE reference numbers explains where to find it.

The same page warns that you must contact the employer helpline if you start paying employees less often, so that HMRC do not send you a non filing notice through PAYE Online. Without the annual flag, a month with neither an FPS nor an EPS can prompt those notices. For how penalties work, see PAYE late filing and payment penalties.

What do I report and when?

In the month you pay, you send an FPS on or before the payday in the usual way; the fields are explained in our guide to FPS and EPS returns. HMRC’s list of payroll information to report says the pay frequency field should show MA if you pay annually, and the tax month number should be the month you paid them.

The 2026 to 2027 CWG2 employer guide gives specific rules for the yearly pay interval:

• For tax, if you use a code on a cumulative basis, use the tax tables for month 12, and report the payment on the FPS as month 12 whenever it is made between 6 April and 5 April.
• If the code is on a week 1 or month 1 basis, also use the month 12 table.
• For National Insurance the earnings period is yearly. Using tables, divide the earnings by 12, look up the monthly table, then multiply the contributions by 12, or use the exact percentage method.

Using the month 12 table on a cumulative code means the whole year’s tax free pay is set against the single payment.

How do directors’ National Insurance rules fit in?

A company director already has an annual earnings period for Class 1 National Insurance. NIM12021 says a director within regulation 8 of the Social Security (Contributions) Regulations 2001 has an annual earnings period, which must be used for every payment whatever the intervals between them, with the annual limits found by multiplying the weekly figures by 52. HMRC’s payroll reporting guidance says to enter AN in the director’s NIC method field for the standard annual method, or AL for the alternative method. Our page on directors’ National Insurance covers the detail.

Timing also needs care. CWG2 says PAYE on a director’s pay must be operated on the earliest of payment, entitlement, crediting in the company’s accounts or records, or the date the remuneration is determined. If a board votes a fee in February but pays it in May, PAYE may be due in February, which would put the payment in the wrong tax month for the scheme. Our page on when directors’ pay counts as received explains the rules.

When is the PAYE due?

An annual scheme changes how often you pay, not the deadline for the month you pay. HMRC’s guidance on paying employers’ PAYE says the bill is due by the 22nd of the next tax month if you pay electronically, or must reach HMRC by the 19th if you pay by cheque through the post. So a director paid on 20 March (tax month 12, ending 5 April) means the tax and National Insurance must reach HMRC by 22 April. Our guide on when to pay PAYE to HMRC covers payment methods and references.

What if I want to change the payment month?

HMRC’s guidance says that to change the month, you send an FPS in the month you want the new annual payment month to be. If the new month is later than your usual one, you also need to send an EPS for the usual month to tell HMRC you are not paying anyone. Its example: if you usually pay in August but want to move to September, send an EPS in August and an FPS in September.

HMRC also say that if you send more than one FPS in a year, they will assume you no longer wish to operate as an annual scheme and will write to confirm. A second payment in a different month, such as an unplanned bonus, therefore takes you out of the arrangement.

What does this look like in practice?

Illustration only. Hollins Design Ltd has one director and no other staff. Each year the director takes a salary of a fixed amount on 15 March and the rest of her income as dividends.

1. The company registers as an annual scheme with tax month 12 as its payment month.
2. On or before 15 March it sends an FPS showing pay frequency MA, tax month 12, the director’s code applied using the month 12 tables, and Class 1 National Insurance on the annual earnings period.
3. It pays any PAYE and National Insurance due by 22 April.
4. It sends no EPS in the other months and receives no non filing reminders.

Note that the Employment Allowance cannot reduce the National Insurance here: CWG2 says it is not available to companies whose only employee paid above the secondary threshold is a director. Whether paying a salary at all is worthwhile is covered in does a sole director need payroll.

What are the common mistakes?

• Registering an annual scheme while also paying a monthly employee or a pension.
• Paying on a date that falls in a different tax month from the one registered, for example 5 April instead of 6 April.
• Voting or crediting a director’s fee earlier in the year, which triggers PAYE in that earlier month.
• Forgetting that an annual scheme still needs year end steps such as a P60 by 31 May for anyone employed on 5 April.

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Related Accountapedia entries

• How to close a PAYE scheme
• Cycle to work schemes
• Scheme pays for annual allowance charges
• Base cost of shares from employee share schemes
• Can HMRC reopen an enquiry once it is closed

Related cover: Employers liability insurance: the legal requirements and Employers liability vs public liability.

Sources

• GOV.UK: Changing paydays
• GOV.UK: What payroll information to report to hmrc
• GOV.UK: 2026 to 2027 employer further guide to paye and national insurance con
• GOV.UK: Manual page NIM12021
• GOV.UK: Pay paye tax
• GOV.UK: Print

Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 24 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.