HMRC Estimated Your Care Payroll Bill: What Should You Send Back?

Why has HMRC sent a care payroll bill we never calculated?

Because a return it expected for that month never arrived, so HMRC estimated one for you. Around the 22nd of each month its system reviews your PAYE record, and if the Full Payment Submission for a pay run, or a nil Employer Payment Summary for a month when you paid no one, is missing, it raises a specified charge: an estimated amount of tax, National Insurance and student loan deductions for the month.

The number is not invented. It takes your year-to-date figures and spreads them across the months you have already filed, so what you are really looking at is last month's payroll projected onto the gap. Care agencies meet this more than most, because payroll runs weekly or fortnightly and one missed submission during a busy mobilisation is enough to set it off. Our page for care agency accountants covers how we keep those filings current so the gap never opens.

A specified charge is the close cousin of the wider demand we cover in the guide to disputing a care agency PAYE demand. This piece is the narrower case: the charge exists only because a return is missing, and the cure is to file it.

How do we tell an estimate apart from a bill we actually owe?

If no return reached HMRC for the month, the charge is an estimate. If you filed and the figure is HMRC's version of what you sent, it is a real liability you can only move with a correction. The deciding evidence is your own filing record, not the letter.

Open your payroll software and check, month by month, whether a submission went in for every pay run. Where nothing was filed, you are looking at an estimate. Where a return did go in but the numbers look wrong, that is a correction job, and our payroll and PAYE service handles both. One caveat worth holding onto: across a quarter a balance can be part real and part estimate, so check each month on its own rather than trusting the headline figure HMRC shows.

What should we send HMRC to replace the estimate?

Send the outstanding Full Payment Submission for that month, or a nil Employer Payment Summary if you genuinely paid no one. Either one replaces the estimate with the truth. File the FPS with the date you actually paid staff and a late reporting reason, and the specified charge is reversed and your real charge created in its place.

What a nil EPS tells HMRC

If a month had no pay run at all, an FPS is the wrong tool. Send an Employer Payment Summary with no payment for period set to yes, by the 19th of the following tax month, and do not also send an FPS. That tells HMRC there was nothing to pay and stops the estimate forming. The same EPS is how you claim reductions, statutory maternity, paternity or sick pay recovered, or Employment Allowance, so HMRC lowers what the FPS says you owe.

How far off is the estimate from our real payroll?

It can land either side of the truth, because the estimate is your past projected forward, so a growing agency is often under-billed and a shrinking one over-billed.

When the estimate is too low

Here is the part no one spells out. Because HMRC builds the estimate from your year-to-date figures divided across the months you filed, the guess only matches a steady payroll. Win a council block contract and double your carers, and the estimate trails the real wage bill, so clearing it can reveal more to pay, with interest running from the due date. Lose a contract or run a quiet summer, and the estimate overstates the month, so the enforceable figure falls the moment you file. The direction tells you how urgent it is; the fix, filing the real return, is the same either way.

What is the right order to respond and correct?

Check, file, then reconcile, in that order, because the charge only reverses once the outstanding return reaches HMRC. Paying the estimate first just leaves you chasing a refund against a figure that was never real.

If you pay HMRC quarterly rather than monthly, the estimate does not clear itself the same way, because HMRC still expects a monthly filing signal, so a return or a nil EPS for each month is what removes it. Keep the evidence from your software while you wait, because an estimate that is pursued as a debt before it reverses is still legally enforceable and will attract chasing even though the real figure is lower.

Do we still face penalties and interest if the estimate was wrong?

Possibly, but on the missing return and any genuinely late payment, not on the estimate itself, so filing quickly is what limits the damage. Late filing penalties have applied to real time reporting since 6 October 2014, and interest runs on PAYE paid after its due date, so a month left estimated for too long costs on both counts.

Two things often make an estimate look worse than the real bill. The first is an unclaimed Employment Allowance, which is 10,500 pounds for the 2026 to 2027 year and only reduces your bill once claimed on an EPS. The second is statutory pay you recovered but never reported. Where HMRC's figures are wrong because of an earlier mistake rather than a missing return, use the Get help to correct an employer PAYE bill service: you give the FPS amounts from your payroll software rather than your tax account, one request for each tax year, and HMRC replies by email, usually within 40 working days, with your figures and a help card. If you cannot file at once, a reasonable excuse can reduce a penalty, but that is a separate argument from the estimate and worth taking advice on.

Care agency payroll carries pressures a general payroll service rarely sees: travel time, sleep-ins, council and ICB funding cycles and fast staff turnover during mobilisation. Our care agency accountants page explains how we run payroll, PAYE and funder invoicing for providers across London so returns go in on time and estimated charges never get the chance to form.

What this means for your care agency

Treat an estimated PAYE charge as a missing return problem, not a payment problem. Find the month, file the FPS or the nil EPS, let the specified charge reverse, then pay the figure your own payroll actually produced. The order protects your cash, because paying a guess ties money up against a charge that was never yours.

LOYALS is a King's Cross firm of accountants and business consultants that runs payroll, PAYE and funder invoicing for care agencies across London, and we would rather file the return that clears an estimate than watch it harden into a debt. Ask our payroll and PAYE team to check the disputed payroll balance and prepare the response, and we will tell you which months are estimates, what to file, and what you really owe. Start with a short call about your PAYE charge.