Business News

HMRC Introduce Penalties for Late Payment of PAYE

Employers and contractors that do not submit PAYE on time could be charged a penalty.

HMRC has announced that anyone who fails to make their payments in full and on time after May 2010 might be subject to a penalty in the following tax year (2011). These new regulations will apply to:

  • Tax
  • National Insurance Contributions (NICs)
  • Construction Industry Scheme deductions
  • Student Loan deductions

Large employers and contractors will still be obliged to pay electronically, but the new penalties will replace mandatory electronic surcharges.

HMRC indicate that the penalty amount will depend on how often payments are due.

Monthly and quarterly payments – Penalties will start at 1% of the late amount and will increase to 4% of this amount, depending on how many times your payments are late.

No penalties will be imposed on those who make just one late payment in a single tax year, unless that payment is more than six months late.

Monthly and quarterly amounts more than six months late – If the monthly or quarterly payment is more than six months late HMRC will charge a penalty of 5% of the late amount. They may charge further penalties at 5% if you have still not paid after 12 months.

Annual payments (such as Class 1A NICs and PAYE Settlement Agreements) – HMRC will issue up to three penalties of 5% of the amount that is late, depending on how long the payment has been outstanding.

Further information on the new penalties is available at