From 6 April 2015 automatic in-year late payment penalties have started being issued by HMRC. The penalties will be raised for failure to pay PAYE due in full, and on time for a particular tax month. A PAYE payment is deemed to be late if HMRC have not received it by the 22nd of the following tax month for electronic payments, or the 19th for cash or cheque payments. For example, if the payment date of your payroll falls between 6 April 2015 and 5 May 2015 and you plan on paying HMRC by cheque, the payment of any PAYE due to HMRC should be sent in time for the cheque to clear by 19 May 2015. If paying online the payment should be made by 22 May 2015.
The first late payment will not incur a penalty unless unpaid after 30 days. From then on interest will be accrued based on defaults (late payments) in the tax year. A rate between 1% and 4% will be charged for defaults in the tax year, based on how many times you forget to pay PAYE on time and in full.
Late Filing Penalties
The following dates outline from when late filing penalties will be in place from. These penalties are incurred when an FPS (Full Payment Submission) or EPS (Employer Payment Summary) is not filed in any tax month. An FPS submission is deemed to be late when it is submitted after the payment date stated on the submission.
- 6 October 2014 – For employers of 50+ employees.
- 6 March 2015 – For employers with fewer than 50 employees.
- There is a reporting relaxation for existing employers (PAYE references opened before 6 April 2014) with fewer than 10 employees. These employers can report monthly, on or before the last working day of the month by using late reporting code ‘E’ up until April 2016 when all employers must comply with the standard reporting regulations.
HMRC have, however, decided to allow a 3-day grace period in which late returns can be filed without penalty. Any employer who has received a penalty for a period in which the FPS was sent 3 days late or less should appeal online by logging in to the PAYE for employers section and selecting “appeal a penalty”.
Late filing penalties will be subject to a sliding scale, dependent on the number of employees on the payroll. Employers with less than 9 employees will receive a £100 fine, which will increase to £400 for employers with 250 employees or more. The first default in a tax year will not attract a penalty.
Penalties will start being imposed by HMRC at the end of the tax quarter where a penalty is due for a tax month. A tax month runs from the 6th of one month to the 5th of the following.
For more information on RTI or any payroll matter please contact Neil Cameron, Payroll Manager by email to firstname.lastname@example.org or phone 0131 558 5800.