Late PAYE payment 😬 what are the penalties?
Updated: Sep 9, 2022
Employers incur PAYE liabilities payable to HMRC when they deduct Income Tax and National Insurance from their employees in processing the payroll.
When are the payment deadlines? 🗓️
A tax month is always considered to end on the 5th monthly.
If you choose to pay monthly, then HMRC must receive your payment by the 22nd
If you choose to pay quarterly, then your payment deadlines are:
22nd July (for months 1 – 3 ending 5th July)
22nd October (for months 4 – 6 ending 5th October)
22nd January (for months 7 – 9 ending 5th January)
22nd April (for months 10 – 12 ending 5th April)
Only businesses whose PAYE liabilities are usually less than £1,500 per month can choose to pay quarterly (where possible, we recommend selecting quarterly payments).
PAYE deadlines and how to pay can be found here: https://www.gov.uk/pay-paye-tax
Remember the deadline is for HMRC to have received payment by the 22nd of the month. We recommend making your payment (even if using Faster Payments) at least one day early. Some find it helpful to set a future dated payment using Online Banking to avoid forgetting.
In the rare instance that you’re not paying electronically, the payment deadline becomes the 19th of the month.
What are the penalties for late payment? ⛔
HMRC PAYE allows one penalty-free late payment per tax year.
After that, the penalty is 1% of the amount outstanding + interest. The penalty % rate increases if you exceed 4 late payments.
Details of the penalty regime are here: https://www.gov.uk/guidance/what-happens-if-you-dont-pay-paye-and-national-insurance-on-time
However, for the time being, penalties are not being issued automatically as HMRC PAYE continue to trial a discretionary approach according to the PAYE Employer Bulletin June 2021: https://www.gov.uk/government/publications/employer-bulletin-june-2021/employer-bulletin-june-2021
HMRC may withdraw their discretionary trail at any time and resume issuing automatic penalties.
Would you like help to pay less tax? Feel free to get in-touch or check-out our related posts 👇