PAYE late payment penalties
New penalties have been introduced for late payment of PAYE. The penalties will apply to both employers and contractors who do not pay PAYE on time and will apply to tax, national insurance contributions (NICs), construction industry scheme deductions and student loan deductions. The penalties apply to monthly, quarterly and annual periods of PAYE starting on or after 6 April 2010.
The new penalties will replace the mandatory electronic payment surcharge which has applied to ‘large’ employers and contractors who pay electronically. The new penalties will apply to all employers and contractors regardless of whether they file online or not.
The new penalties will be calculated as follows:
- Monthly and quarterly payments which are up to six months late will incur penalties which range from 1% to 4% depending on the number of late payments. HMRC will not charge a penalty where only one late payment was made in a tax year and the payment was no more than six months late.
- Monthly and quarterly payments which are more than six months late may generate penalties of 5% with a further 5% if payments have not been made after 12 months.
- Annual payments such as Class 1A NICs will generate up to three penalties of 5% each depending on the lateness of the payment.