Are you aware of the importance of submitting your payroll data and paying your PAYE bill on time?
Late RTI Submissions (Caused by not sending your payroll information on time)
When Penalties are Charged:
Firstly, you may incur a penalty if:
- Your Full Payment Submission (FPS) was late.
- You did not send:
- The expected number of FPSs.
- An Employer Payment Summary (EPS) when you did not pay any employees in a tax month.
Secondly, HMRC Will Not Charge a Penalty If:
- Your FPS is late, but all reported payments on the FPS are within three days of your employees’ payday. However, employers who frequently file after the payment date but within three days may be contacted or considered for a penalty.
- Specifically, you are a new employer, and you submitted your first FPS within 30 days of paying an employee.
- It is your first failure in the tax year to submit a report on time (this exemption does not apply to employers registered with HMRC as an annual scheme).
Penalty Amounts
The amount you pay depends on the number of employees you have:
| Number of employees | Monthly penalty |
| 1 to 9 | £100 |
| 10 to 49 | £200 |
| 50 to 249 | £300 |
| 250 or more | £400 |
If you run more than one PAYE scheme, you can be charged penalties for each.
How HMRC Estimates What You Owe
If you do not submit your FPS on time or fail to inform HMRC via an EPS that you have not paid any employees, HMRC may issue a specified charge based on an estimate of what they believe you owe. This estimate is based on your previous PAYE payment and filing history and can be viewed in your PAYE account online.
A specified charge does not replace the need to submit your FPS or EPS. Only by submitting the missing FPS or EPS for each month will:
- The charges be replaced with the correct amount due for each month.
- Support any appeal you make against a late filing penalty.
If you send updated year-to-date figures in your next FPS instead of the missing submissions, the specified charges will remain in place. However, your accounting record will be adjusted to reflect the year-to-date figures provided in the later month.
If You Receive a Penalty
HMRC issues penalty notices every quarter. A notice will include:
- The amount you owe.
- How to pay.
- What to do if you disagree with HMRC’s decision to charge you.
If you pay the penalty within 30 days of receiving the notice, you will not be charged interest. You can appeal if you believe:
- The penalty is not due.
- The amount of the penalty is incorrect.
- You had a reasonable excuse for sending your reports late.
Grounds for appeal may include:
- Incorrect data on the returns.
- Death or bereavement.
- Incorrect filing expectations.
If you are wanting to appeal, you can do so by online using HMRC’s PAYE for Employers service. Once logged in, select ‘Appeal a penalty’ and you’ll receive immediate acknowledgment of your submission.
Late Payments
HMRC charges late payment penalties on PAYE amounts that are not paid in full and on time. These amounts include:
- Monthly, quarterly, or annual PAYE.
- Student loan deductions.
- Construction Industry Scheme (CIS) deductions.
- Class 1 National Insurance contributions (NICs).
- Annual payments of employers’ Class 1A and Class 1B NICs.
- Determinations made by HMRC if additional tax is deemed payable.
- Decisions regarding liability to pay NICs and the amounts due.
Penalty Amounts for Late Monthly and Quarterly PAYE Payments
Your first late payment in a tax year does not count as a default.
| Number of defaults in a tax year | Penalty percentage applied to the amount that is late in the relevant tax month (ignoring the first late payment in the tax year) |
| 1 to 3 | 1% |
| 4 to 6 | 2% |
| 7 to 9 | 3% |
| 10 or more | 4% |
Daily interest will accrue on all unpaid amounts from the due date until the date of payment.
Additional Penalties
You’ll incur a late payment penalty if you pay less than the full amount due. If the full amount is still unpaid after six months, an additional penalty of 5% of the unpaid amount will be charged. Additionally, a further 5% penalty will be applied if the amount remains unpaid after 12 months. These additional penalties apply even if only one payment in the tax year is late.
End of Year Adjustments
If you pay an adjustment after the end of the year under a special arrangement, late payment penalties will not be applied, provided you adhere to the terms of the arrangement. For example, the ‘Intermediaries’ rules (commonly known as IR35) or a formal modified PAYE arrangement known as ‘Employment Procedures Appendix 6’.
Penalties for Amounts Due Annually or Occasionally
Furthermore, a penalty may be charged if you do not pay the full amount by the ‘penalty date’. For payments such as Class 1A and Class 1B NICs, HMRC determinations and assessments, or amendments to returns, the ‘penalty date’ is 30 days after the due date. For these payments, you may incur:
- A 5% penalty if the full amount is not paid within 30 days of the due date.
- An additional 5% penalty if the full amount is not paid within six months of the due date.
- A further 5% penalty if the full amount is not paid within 12 months of the due date.
In most other cases, the penalty date is the day after the due date.
If You Receive a Penalty
Finally, a penalty notice will include the amount you owe, how to pay, and what to do if you do not agree with HMRC’s decision to charge you.
If you appeal, in some cases, HMRC will accept and settle the appeal automatically.
The Notice of Penalty Assessment will contain a ‘Unique ID’ for each penalty shown on the notice. You must include the Unique ID to identify which penalty you wish to appeal against.
Further Information
For more information submissions and payments to HMRC, please contact your usual NRB advisor or our payroll team.
Click here to find out more about our Payroll services.
