What happens if you can't pay

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:

  • 19th of the month following the end of the tax month if you pay by cash or cheque or
  • 22nd of the month following the end of the tax month if you pay electronically. But if the 22nd falls on a weekend or bank holiday then, unless it's a faster payment type, HMRC must have your payment by the last bank working day before then.

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 make a payment reported on an FPS

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, as they may be able to arrange a payment plan with you. If you do make an agreement before the due date, you can avoid penalties for the particular period or periods covered, providing you keep to the terms of the arrangement. But you will still have to pay interest on any amounts paid after the year's end.

You must not amend your payroll details before submitting an FPS in order for you to be able to pay the amounts 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

Business Payment Support Service

Link to HMRC interest rates

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If your payment is overdue

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.

PAYE/National Insurance late payment penalties

Business Payment Support Service

Link to HMRC interest rates

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More useful links

PAYE/Class 1 National Insurance

Payments and deadlines

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