News Archive

New Year New Penalties

Apr 23, 2010
As most employers will be aware PAYE and employee National Insurance contributions should be deducted from employees salaries and paid over to HMRC by the 19th of the following month, or 22nd if payment is made electronically. In some circumstances quarterly or annual payments are allowed. However some employers have not made payments by the due dates. Until now no penalty or interest was due as long as the PAYE and National Insurance was paid by 19th (or 22nd) of April after the end of the tax year. If payment was then late HMRC would charge interest but no penalty.

However this all changes from 6 April 2010.

New penalties will be applied for in year payment of PAYE, student loan and CIS deductions.
The penalties will be based on three factors:
• The amount of tax not paid by the due date
• The number of times payment is made late in a tax year
• The length of time for which payments are outstanding

There will be no penalty for the first late payment but any further late payments will be subject to increasing penalties starting at 1% and rising to 4% for 11 or 12 late payments.

In addition to monthly penalties a 5% charge will be applied to payments outstanding 6 months after the due date and a further 5% for amounts outstanding for 12 months.

All employers should ensure that payment is made in good time for funds to be received in HMRC's bank account by the due date. In particular if paying by cheque payment should be made in time for the funds to be cleared by the due date.

If you have any questions about the new penalty regime please contact us.