Last updated: 16 October 2026
Do employers have to report employee hours to HMRC?
Not in detail. HMRC planned to make employers report the actual hours each employee worked through Real Time Information (RTI) payroll submissions. The start date was first delayed by a year to April 2026. In January 2025 HMRC then dropped the plan, after feedback from employers, payroll bodies and software developers about the cost and difficulty. There is no requirement to report exact hours.
What employers still report
Every Full Payment Submission (FPS) must still include the “normal hours worked” band for each employee. The bands are:
| Band | Normal hours a week |
| A | Up to 15.99 |
| B | 16 to 23.99 |
| C | 24 to 29.99 |
| D | 30 or more |
| E | Other, for example irregular hours |
These bands help the Department for Work and Pensions with Universal Credit and other benefits, so they should be accurate and updated when hours change.
Changes to Self Assessment data
Other parts of the same package did go ahead for Self Assessment, starting with 2025/26 returns:
- Directors of close companies must give the company name and registration number, the dividends they received from it and their highest percentage shareholding in the year.
- Self-employed people must report the dates their business started or stopped trading, where these fall in the tax year.
These changes come from the Income Tax (Additional Information to be included in Returns) Regulations 2025 and help HMRC check returns and design future policy. They affect returns filed from April 2026 onwards.
Why accurate payroll data still matters
HMRC uses RTI data to set tax codes, check National Minimum Wage compliance and pay benefits. The National Living Wage is £12.71 an hour from April 2026, and HMRC’s minimum wage team can ask for time records to check pay. Even without hours reporting, you must keep records showing that each worker was paid at least the minimum wage for the hours they worked, for six years.
Example
A small shop employs a student for 12 hours a week, band A. In the summer her hours rise to 32 a week. The employer should update the band to D on the next FPS. This keeps any Universal Credit claim correct and helps show that her pay met the £10.85 rate for 18 to 20-year-olds.
What to do now
- Check the hours band for every employee in your payroll software.
2. Keep timesheets or rotas, especially for hourly paid staff.
3. If you are a director-shareholder, keep your dividend vouchers and shareholding details ready for your tax return.
4. If you start or stop self-employment, note the exact date.
Starters and leavers
The hours band should be set correctly from the first FPS for a new starter and kept up to date until the leaving date. When a leaver is re-employed, start a new employment record with a new payroll ID rather than reusing the old one.
Frequently asked questions
Could hours reporting come back?
HMRC has said it will look at other ways to get the data, but there are no current plans to legislate.
Is there a penalty for the wrong hours band?
No set penalty, but repeated errors could prompt HMRC enquiries.
Do I need to report hours for directors?
Use the band that best reflects their normal hours, or band E if irregular.
Does this affect the self-employed?
Only the start and end date question on the tax return.
Related: what RTI is, payroll hygiene and minimum wage rules.
Talk to Accotax
Want this handled for you? Our team at Accotax can help with payroll reporting and Self Assessment. See our payroll services service, or contact us for a free, no-obligation quote.
This page is general guidance based on HMRC rules for the 2026/27 tax year, checked against gov.uk on 16 October 2026. It is not personal advice, so speak to an accountant about your own situation.
