What Happens If I Miss MY PAYE Payment?

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Where ever you will go, no matter what your status is, you cannot avoid the responsibility with tax. It can be your most significant contribution to the community and your duty as compliance with the government, or so they say. This article will also discuss paying an income tax through PAYE (Pay As You Earn) payment.

PAYE payment, we are all familiar with it. It is somewhat like the system that your pension provider uses to take the Income Tax and National Insurance contributions of being a worker. The tax code tells your employer how much to deduct from your salary that corresponds.

How Does PAYE Payment work?

If you are an employer, you must deduct PAYE payment from your employee’s and workforce’s salaries and wages at a specific prevailing rate to remit. 

You must have your PAYE payment or pay it to HM Revenue and Customs (HMRC) every 19th of each month.

 

Employer’s PAYE Payment might include the following items:
  • Class 1 and 1B National Insurance
  • Employee Income Tax Deductions
  • Construction Industry Scheme (CIS) deductions
  • Student Loan Repayments
  • Your Apprenticeship Levy Payments

But take note of these:

  • PAYE Settlement Agreements are also paid separately
  • Your Class 1A National Insurance on work benefits that you provide for your employees are paid separately.

Having the question of…

What Happens if I miss my PAYE Payment?

There will be specific charges and penalties by HMRC for late PAYE payments and those that are not paid in full and on time.

Late payment penalties for PAYE and National … – GOV.UK. https://www.gov.uk/guidance/what-happens-if-you-dont-pay-paye-and-national-insurance-on-time

As per Schedule 56 of the 2009 Finance Act applied since April 6th, 2020, these penalty policies are as follows for late PAYE payment and NICs.

This applies to the following:

  • Nation Insurance Contributions
  • Pay As You Earn
  • Student Loan Deductions
  • Construction Industry Scheme deductions

Then the penalties are charged according to whether the payment is due monthly, quarterly, or annually.

See the Ross martin content for a more detailed discussion of this.

Some other inclusions with the penalties are:

  • Monthly, quarterly or annual PAYE
  • Determinations made by HMRC where it appears that there may be further tax payable.
  • Decisions – For example, about a person’s liability to pay NICs and the amount payable.

Determining How Much PAYE Payment should be made with these penalties.

 

-With regards to the Monthly and Quarterly PAYE Payments

 

Number of Defaults in a Tax YearPenalty percentage applied to the amount that is late in the relevant tax month (ignoring the first late payment in the tax year)
1 to 31%
4 to 62%
7 to 93%
10 or more4%
Daily interest will continue to build up on all unpaid amounts from the due and payable date to the date of payment.
For Additional Penalty Payments
  • If you pay less than the actual amount due you should be paying, then it will be automatically considered and charged as a late payment penalty.
  • An additional penalty of 5% will be charged if you have not paid a monthly or quarterly PAYE payment in full after 6 months. And another 5% interest after 12 months.
  • Take note that these additional penalties apply even where only one payment in the year is late. 

You have 30 days from the date on the PAYE late penalty notice to amend your payment or appeal the necessary actions.

So yes, if you get a penalty, a notice will include how much you are supposed to pay and liable and what actions to take if you yourself disagree with HMRC’s decision charging you due to some situation.

Basically, interest will then add up to your amount’s payable if 30 days from getting notice has passed.

 

Final Thoughts

So now, plan out ahead of time of taking actions towards your PAYE payment in order for you to avoid these interest and penalties you should not have in the first place so your business can run smoothly as you proceed with your operation and your tax responsibility is well placed and so as your financial system and management.

 

If you are seeking more of this content and how you can repurpose your business or more business planning so that it would snugly fit into the present world situation, Annette & Co. is here to offer you a FREE consultationAnnette Ferguson – Chartered Accountant and Certified Profit First Professional – can help you unlock financial strategies to improve the profitability of your business amidst an economic crisis.

Annette Ferguson

Annette Ferguson

Owner of Annette & Co. - Chartered Accountants & Certifed Profit First Professionals. Helping Online service-based entrepreneurs find clarity in their numbers, increase wealth and have more money in their pockets.

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