As you’ll be aware when submitting monthly contributions, there’s a 0.2% tolerance on the individual tier values. This is comparing the actual contributions entered on the form against the calculated total when applying the relevant percentage to the contributory salary.

If the tolerance exceeds 0.2% the form returns a “No” and a reason has to be provided. Recently, during the End of Year Certificate (EOYC) exercise, employers have challenged why we cannot accept the EOYC when the tolerance is greater than £50 but we’ll accept the monthly contributions with an imbalance.

The reason for this is that on balance many ratio queries are resolved the month following identification and in effect cancel each other out, so that within the year there’s no imbalance while there is for two separate months. The current £50 tolerance is applied to account for roundings, whereby the maximum rounding is 0.49p. This will be exceeded if there’s in excess of a minimum of 10,200 transactions that require rounding (and assuming that they’re either all rounded up or down).

If you’re issued with an email regarding the imbalance we advise you to provide a response for the reasons and we’ll look at this on an individual basis. If you have any queries, please email us (This link opens in a new window).