PAYE – Late payment penalties
New penalties will be charged from 2010-11 for late payment of PAYE, including tax, NICs and CIS.
In this connection HMRC have issued a new factsheet entitled ‘Penalties for late payment of employer and contractor PAYE’. The new penalties will begin to apply for late payments beginning in May 2010.
The penalties will apply to both employers and contractors who do not pay PAYE on time. Also covered will be late payments of National Insurance contributions (NICs), Construction Industry Scheme deductions and Student Loan deductions.
The new penalties will replace the mandatory electronic surcharge which currently applies to ‘large’ employers and contractors who pay electronically. All employers and contractors will be affected regardless of whether or not they file online.
The calculation of the new penalties will depend on whether payments are made monthly, quarterly or annually.
- Monthly and quarterly payments which are up to six months late will incur penalties ranging 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 can incur penalties of 5%with a further 5% if payments have not been made after 12 months.
- Annual payments such as Class 1A NICs are liable for up to three penalties of 5% each depending on the lateness of the payment.