PAYE Late payment penalties

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HMRC have not previously issued penalties for late PAYE payments due during the tax year providing they are all paid by the following 19th April, however for payments of PAYE due from May 2010, HMRC intend on implementing late payment penalties. You may have to pay penalties if you make more than one PAYE payment late.

The new penalties will apply to all employers. If you are unable to make a payment you should inform HMRC as soon as possible.

The new penalties will be a percentage of the amount you pay late. They will start at 1% and increase to 4% depending on the number of late payments in the year.

There are also penalties of 5% if any of the PAYE due is still not paid after 6 months; and again 12 months.

You will not get a penalty if you have a reasonable excuse for being late or if you are only late once in a tax year (unless that payment is more than 6 months overdue).

If you have any questions or would like to discuss any of the details above please do not hesitate to contact us.

No of Late Payments in any tax year and Penalty Rate

1 Late Payment – Penalty Rate – 0%

2 – 4 Late Payments – Penalty Rate – 1%

5 – 7 Late Payments – Penalty Rate – 2%

8 – 10 Late Payments – Penalty Rate – 3%

11 or more Late Payments – Penalty Rate – 4%

Those on quarterly PAYE remittances will be treated more leniently in that the maximum rate of penalty will be limited to 1%

Late payment interest will apply in addition to default penalties.