Paying PAYE on time

From May 2010 you may have to pay a penalty if you do not pay the PAYE due each month, on time and in full.

What if I do not pay on time?

We intend to implement the late payment penalties for payments due from May 2010. From then on, you may have to pay penalties if you make more than one PAYE payment late. The new penalties will apply to all employers, including large employers (who are required to pay electronically) and will replace the Mandatory Electronic Payment surcharge.

You should tell us as soon as you know that you will not be able to pay on time.

How will the new penalties work?

The penalties will be a percentage of the amount you pay late. They will start at 1 per cent and increase to 4 per cent depending on the number of late payments in a year.

There are also penalties of 5 per cent if any of the PAYE due is still not paid after six months; and again after twelve months.

You will not get a penalty if you have a reasonable excuse for being late or if you are only late once in a tax year (unless that payment is more than six months overdue). You can also appeal against the penalty if you disagree with HMRC’s decision to impose it, or if you believe that the amount of the penalty is wrong.

Budget Note 90 contains more information about the new penalties.

Avoiding penalties

To make sure you avoid penalties please pay the right amounts, by the PAYE payment deadlines.

What if I can’t pay what I owe you?

You should tell us as soon as you can, if you think you will have difficulty paying, otherwise we may start recovery action.

Please contact our dedicated Business Payment Support Service (BPSS) on 0845 302 1435 - Monday to Friday 8.00 am to 8.00 pm; and Saturday and Sunday 8.00 am to 4.00 pm.

We will need the following information if you call the BPSS:

  • your tax reference number
  • details of the PAYE amount that you will have trouble paying
  • basic details of your business’s income and outgoings

But please note that the BPSS is intended for new enquiries only. If we have already been in touch with you about an overdue payment, or if you already have a payment arrangement with us, please ring the office that contacted you or set up your payment arrangement, as they will be better able to discuss your payment options or changes to existing arrangements with you.

If we agree a payment arrangement with you, you will not be charged any penalties for the period of the agreement. Any penalties we have already charged can be included in the payment arrangement.

What if I do not have anything to pay?

If you don’t have anything to pay for a month or quarter, it’s important you let us know. This will stop us sending any unnecessary reminders. You can do this by:

  • completing the form on-line
  • sending us a signed payslip for the correct month or quarter marked 'NIL due', if you still receive a payslip booklet
  • phoning 0845 366 7816 and providing your Accounts Office reference number and the details of the month or quarter for which no payment is due