Late Payment Penalties

PAYE/ NATIONAL INSURANCE LATE PAYMENT PENALTIES

 

 

 

NEW RULES FROM MAY 2010

 

 

 

 

 

From May 2010 HMRC have introduced a new regime of penalties which will be levied on late payments of the following types of tax:

 

·        Monthly and quarterly PAYE tax

·        Student Loan deductions

·        Construction Industry Scheme payments

·        Class 1 National Insurance Contributions

·        Annual payments of Employers Class 1A NIC’s

·        Annual PAYE Settlement Agreement payments

·        PAYE determinations

 

 

Penalties will be charged on each PAYE Scheme independently, so if you have more than one scheme you need to make sure that amounts due for each are paid on time and in full.

 

Monthly and quarterly payments are due by the 19^th of the month following the end of the tax month or quarter in question e.g. payment for the month ended 5^th September is due by 19^th September.

 

The first late payment in the tax year does not attract a penalty as long as it is paid within six months of the due date but any additional late payments are charged as follows:

 

No. of times payments

are late in tax year.                                Penalty %                                

 

2-4                                                       1%

5-7                                                       2%

8-10                                                     3%

11 or more                                           4%

 

The amount to which the penalty percentages apply is the total amount that is late in the tax year (ignoring the first late payment in that tax year.)

 

Additional penalties of 5% will be levied on monthly and quarterly payments which remain outstanding after six months and 12 months. These penalties apply even where only one payment in the tax year is late.

 

It is important to note that End of Year adjustments should not now be made as penalties will apply to the additional tax paid at the year end but due earlier in the year. It is also important to make sure that the correct information is put through the payroll each month or quarter as future adjustments may also lead to penalties. To avoid receiving a penalty you must make certain that you pay the correct amount on time each month or quarter.

 

The above rules also apply to those employers who make annual payments of PAYE Tax and NIC. You must ensure that they are paid on time otherwise penalties may be levied.

 

Amounts due annually or occasionally, such as Class 1A National Insurance Contributions on benefits in kind, will attract penalties if they are not paid within 30 days of the due date (19^th July for Class 1A NIC).

Further penalties of 5% are due if these amounts remain unpaid six and twelve months after the due date.

 

Where a penalty is deemed to be due HMRC will send notification after the end of the tax year. There is a right of appeal but only if there is a reasonable excuse for not meeting the payment deadline.

 

For further information on the new rules please visit www.hmrc.gov.uk/paye/problems-inspections/late payments.htm.

 

 

Higginson & Co UK Ltd