In today’s challenging business environment, with the recent increase in National Minimum Wage (NMW) rates and rising input costs like food and energy, it’s crucial to effectively manage your PAYE payments. While it may be tempting to utilize the funds deducted from your payroll to address immediate financial obligations, it’s important to approach this with caution.
Late payment interest of 7% is charged if payroll deductions are not paid to HMRC by the 22nd of each month. Moreover, late payment penalties are imposed based on the number of late payments within the tax year. Here’s a breakdown of the penalties:
- For the first late payment: No penalty
- Additional penalty after 6 months: 5%
- Additional penalty after 12 months: 5%
If you have only one late PAYE payment to HMRC in the tax year and the outstanding amount is paid within six months of the due date, no penalty will be levied. However, if you make monthly payments and there’s a delay in their timing, even by one day, the penalties can quickly accumulate.
If you struggle to make your PAYE payments to HMRC on time, it is advisable to apply for a Time to Pay (TTP) agreement through your online business tax account on gov.uk. This arrangement allows you to spread your PAYE debt over a period of six months.
The TTP agreement will be automatically granted if the following conditions are met:
- All PAYE and CIS returns have been submitted.
- PAYE debt is below £15,000.
- There are no other outstanding tax debts.
- The application is made within 35 days of the PAYE due date.
- The TTP plan ensures the debt will be fully paid within six months.
If you are unable to meet the above conditions, it is recommended to contact HMRC on the payment support service at 0300 200 3825 to negotiate a TTP agreement.
By effectively managing your PAYE payments and adhering to the prescribed guidelines, you can avoid late payment penalties and maintain a healthy financial standing for your business. Contact us directly for more information on how we can help.
Latest Articles
Unlocking Financial Success with K2 Accountancy Group, Your Trusted Ilkeston Accountant
Welcome to K2 Accountancy Group, your reliable Ilkeston Accountant and partner for comprehensive and customised accounting services. As an Ilkeston-based, family-owned and operated business, we take pride in not only delivering top-notch financial solutions but also in giving back to the community through various fundraising initiatives and events.Breaking Down the Autumn Statement 2023: A Fiscal Pivot Towards Growth and Tax Cuts
The Autumn Statement in Brief
Today, The Chancellor of the Exchequer has delivered his autumn statement in the House of Commons after noting that the “plan for the British economy is working, but the work is not done”. Unlocking Success: Your Trusted Nottingham Accountants with Expert Back Office Services
Why Choose K2 as your Nottingham Accountants? At K2 Accountancy Group, we stand out as the premier Nottingham accountants, offering a unique blend of traditional financial services and specialised expertise in back office management. Our commitment to excellence sets us apart, making us the go-to choice for businesses in construction, hospitality, manufacturing, logistics, and beyond.HMRC's "Process Now, Check Later" Approach Leaves Taxpayers Vulnerable to Abuse