HMRC has published guidance for employers about PAYE late payment penalties and how to avoid them
The guidance lists the PAYE payments that are subject to penalties when not paid in full and on time.
These include monthly, quarterly or annual PAYE; student loan deductions; and Construction Industry Scheme (CIS) deductions.
It also provides a table showing the penalty percentage to be applied to late payments depending on the number of defaults in a tax year.
The first failure to pay on time does not count as a default although on subsequent late payments daily interest will continue to accrue on all unpaid amounts from the due and payable date to the date of payment.
Late monthly and quarterly PAYE payments
| Number of defaults in a tax year | Penalty percentage applied to amount that is late in relevant tax month (ignoring first late payment in tax year) (%) |
| 1-3 | 1% |
| 4-6 | 2% |
| 7-9 | 3% |
| 10 or more | 4% |
The guidance also covers additional penalties on amounts that remain unpaid; end of year adjustments under special arrangements; and penalties on amounts due annually or occasionally, such as Class 1A and Class 1B NICs, HMRC determinations and assessments and amendments or corrections to returns.
In addition, the guidance explains what to do if a penalty is charged and the appeals process, including the availability of online appeals from April 2015.
More details are available at https://www.gov.uk/what-happens-if-you-dont-pay-paye-and-national-insurance-on-time