To ensure that your PAYE payments get to the right place within HMRC’s systems, you must quote the correct reference when making the payment. This is made up of your 13-character PAYE reference number (HMRC call this your Accounts Office reference), plus 4 digits to identify the tax period. For the tax month to 5 August 2023 add on ‘0423’.
The payment should arrive with HMRC by 22nd of each month, but if that falls on a weekend, pay by the last working day before that deadline. If you use “Faster Payments” or telephone banking the payment will be processed the same day, even on a weekend or Bank Holiday.
If you don’t pay the PAYE and other payroll deductions to HMRC on time, you will be charged late payment interest, the rate of which is currently 7% p.a. In addition, after the first late payment, you will receive a penalty calculated on the amount of PAYE outstanding, as shown in the table below.
If you are struggling to pay your PAYE, consider applying for a time to pay (TTP) agreement with HMRC , in order to spread the payment over a few months. This TTP agreement will be granted automatically if your business meets all these conditions:
- All PAYE and Construction Industry Scheme (CIS) returns have been submitted;
- PAYE debt is less than £15,000;
- No other tax debts exist;
- You apply within 35 days of the date the PAYE was due;
- The TTP plan will pay off the debt within 6 months.
If all the above conditions aren’t met, TTP agreements must be negotiated individually with HMRC. We can help you prepare for such discussions and also help you to negotiate a bespoke TTP agreement.
| Number of late payments in tax year |
First Penalty | Additional penalty after 6 months |
Additional penalty after 12 months |
| 1 | none | 5% | 5% |
| 2-4 | 1% | 5% | 5% |
| 5-7 | 2% | 5% | 5% |
| 8-10 | 3% | 5% | 5% |
| 11 or more | 4% | 5% | 5% |
