PAYE late payment penalties
HMRC have updated their frequently asked questions (FAQs) regarding the new penalties for the late payment of PAYE beginning with the 2010-11 tax year. 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 FAQ’s published by HMRC include 42 questions and answers under the following headings:
– Who will the new rules apply to?
– What will the new rules cover?
– When will the new rules start?
– When are my payments due?
– What about PAYE errors?
– What are the rules for penalties?
– Financial difficulties
– What happens if I disagree?
The new penalties will apply to all employers and contractors regardless of whether they file online or not. The new penalties will replace the mandatory electronic surcharge which currently applies to ‘large’ employers and contractors who pay electronically.
- The new penalties will be take account of whether payments are made monthly, quarterly or annually.
- 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 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.