Are You Ready? You will be PENALISED if not!
For the tax year 2010-11 onwards HMRC have increased the already heavy burden on employers and businesses dramatically with new new late payment penalties for PAYE payments, including income tax/NICs and construction industry scheme and student loan deductions.
This means that from May 2010 you will most likely have to pay a late payment penalty if you do not pay the PAYE due each month or quarter, ON TIME on time and IN FULL. Late is even one day late!
There will also be late payment penalties for not paying amounts due annually – including Class 1A NICs (on benefits in kind such as Company Cars, Medicial Insurance etc) and PSA (PAYE Settlement Arrangements) amounts – on time and in full.
The new late payment penalties will apply to all employers, not just the large ones. They will replace the Mandatory Electronic Payment surcharge, which currently applies only to large employers.
These ruiles apply to ALL employers and CIS Contractors, even if you have one employee including small schemes such as those for nanny’s or those who receive direct payments to fund a carer etc).
When employers have asked for and agreed with HMRC a “time to pay” HMRC state “The suspension of penalties during a time to pay arrangement will be set out in legislation”.
What about eartlier years?
If you owe PAYE payments due for tax years earlier than 2010-11 the new rules will not apply. The existing rules will still apply to any payments that you should have made before 20 or 23 April 2010 (or before July 2011 for Class 1A NICs).
Under the existing rules you may have to pay a surcharge on those payments, if you are a large employer covered by the Mandatory Electronic Payment rules.
What are the deadlines for PAYE/Tax and NIC payments due?
PAYE/Class 1 NICs ELECTORNIC payment deadline
Your cleared payment must reach HMRC’s bank account no later than the 22nd of the month following the end of the month or quarter to which it relates. Employers, who pay their quarterly payments electronically, have until:
- 22 July to pay their quarter ended 5 July
- 22 October to pay their quarter ended 5 October
- 22 January to pay their quarter ended 5 January
- 22 April to pay their quarter ended 5 April
Where the 22nd falls on a weekend or bank holiday, you must ensure that your payment arrives no later than the last bank working day before the 22nd. Bank working days are Monday to Friday excluding bank holidays. Interest is charged on any amounts owed at the end of the year.
If HMRC has notified you in the previous autumn that you are a large employer (250 or more employees) you must pay electronically.
PAYE/Class 1 NICs POSTAL payment deadlines
If you are not required to pay electronically please ensure your cheque reaches HMRC no later than the 19th of the month following the end of the month or quarter to which it relates. Employers, who pay their quarterly payments by post, have until:
- 19 July to pay their quarter ended 5 July
- 19 October to pay their quarter ended 5 October
- 19 January to pay their quarter ended 5 January
- 19 April to pay their quarter ended 5 April
Where the 19th falls on a weekend or bank holiday, you must ensure that your payment arrives no later than the last bank working day before the 19th. Bank working days are Monday to Friday excluding bank holidays. Interest is charged on any amounts owed at the end of the year.
Deadlines at the end of the tax year
Your forms P11D, P9D and P11D(b) must reach HMRC by 6 July following the end of the tax year.
Your payment of the Class 1A NICs declared on form P11D(b) must then reach HMRC by 22 July, or by 19 July if you pay by cheque.
How much are the new PAYE/CIS penalties?
Unless you are over six months late with the IN YEAR payment, the amount of the penalty will depend on two things: how much is late and how many times payments are late in a tax year.
The table below shows how the penalties will be calculated:
| No of times payments are late in a tax year | Penalty percentage | Amount to which penalty percentages apply |
| 1 * | No penalty | Total amount that is late in the tax year (ignoring the first late payment in that tax year). |
| 2-4 | 1% | |
| 5-7 | 2% | |
| 8-10 | 3% | |
| 11 or more | 4% |
* if one payment is late and it is late by more than six months you will still be liable to a penalty.
Class 1A and 1B NICs
- You are likely to have to pay a penalty of 5 per cent of the amount that is late if you have not paid the full amount within 30 days of the day it is due.
- You may have to pay a further penalty of 5 per cent of any amount that is late if you still have not paid 6 months after the due date, and a further penalty of 5 per cent if you still have not paid 12 months after the due date.