You must report payments you make to your employees to HM Revenue & Customs (HMRC) on a Full Payment Submission (FPS) each payday - even if your cash flow means that you can not pay your PAYE deductions over to HMRC. If you don't submit an FPS, or if appropriate an Employer Payment Summary (EPS) showing 'nil due', then you may have to pay penalties.
You should pay your PAYE deductions over to HMRC on time, but if you don't you may have to pay interest and penalties.
On time means:
This guide will show you what you need to do if you can't pay the PAYE due after you've submitted an FPS, or if you think you may find it difficult to pay in the future.
On this page:
If you can't pay what you've reported to HMRC via an FPS, you should contact the Business Payment Support Service as soon as you can to set up an arrangement to pay. The reason for this is that you can avoid penalties for a particular period or periods if, before the due date, you apply for an arrangement to pay and keep to the terms of the arrangement. But you will still have to pay interest on any amounts paid after the year's end.
If you cannot make a particular payment to HMRC but do not contact the Business Payment Support Service before the payment becomes due, then if you have not yet been contacted by HMRC, you should still contact the Business Payment Support Service to reach a payment arrangement. It's likely that you will have to pay penalties and possibly interest, but you will be able to avoid further penalties or legal action for that PAYE period (or periods) if you make, and keep to, a payment arrangement.
If you haven't reached, or fail to keep to, an arrangement with the Business Payment Support Service, you may be liable to penalties and possibly interest on the outstanding amount. You can find out more about how penalties are worked out by following the link 'PAYE/National Insurance late payment penalties' below.
If you have already been contacted by HMRC about the late payment (for example you have received a demand or a letter about legal action), you should contact the office that issued the letter. You may still be able to make a payment arrangement but it's likely that you will have to pay penalties and possibly interest. But you will be able to avoid further penalties or legal action for that PAYE period (or periods) if you make, and keep to, a payment arrangement.
If your cashflow predictions show that you may find it difficult to meet your PAYE liabilities over the coming weeks or months, but you're currently up to date with your payments as reported on your FPS, you can consider contacting the Business Payment Support Service.
The Business Payment Support Service may be able to arrange a payment plan with you. If you do make an agreement you can avoid penalties, for the particular period or periods covered, providing you keep to the terms of the arrangement. But you will have to pay interest on any tax that's paid after the year's end.
You must not amend your payroll details ahead of submitting an FPS in order for you to be able to pay the tax due. Doing this could cause significant problems with your employees' benefit entitlements and you could be liable for penalties for failing to submit correct returns.