Late Payment Penalty Warning 2010-2011
With effect from April 2010 new penalties have been introduced by HMRC to apply to any employer who does not pay their PAYE liability on time and in full for each period.
Below are details of the new Penalty rates and how they will apply: Monthly or quarterly PAYE payments
You will not be charged a penalty if only one PAYE amount is late in a tax year - unless that payment is over six months late.
The amount of the penalty will depend on how much is late and how many times your payments are late in a tax year. So if you pay part of what is due on time then any penalty will only be charged on the part that is late. The table below shows how the penalties are calculated.
Penalty charges for late monthly and quarterly PAYE payments
| No. of times payments are late in a tax year | Penalty percentage | Amount to which penalty percentages apply |
|---|---|---|
| 1 | No penalty (as long as the payment is less than six months late) | Monthly / quarterly amount that is late in the tax year (ignoring the first late payment in that tax year) |
| 2-4 | 1% | |
| 5-7 | 2% | |
| 8-10 | 3% | |
| 1 or more | 4% |
Worked example:
- Months 1 – 12 where PAYE/NIC liability is £5,000 per month
- Each payment is paid 1 day late
- The first default is ignored
- More than 10 defaults in the year falls within the 4% penalty
- Therefore 11 months x £5,000 = £55,000
- £55,000 x 4% = £2,200 penalty
Additional penalties for monthly and quarterly payments over six months late
If you have still not paid a monthly or quarterly amount in full, after six months you may have to pay a penalty of 5 per cent. A further penalty of 5 per cent may be charged if you have not paid after 12 months. These penalties may be charged in addition to the penalties for monthly and quarterly payments described in the previous section and apply even where only one payment in the tax year is late.
As no further notifications will be issued by HMRC, after the first late payment, until the end April or May 2011 the accruing penalty could build up to a significant fine by the end of the year.
If you do not believe that you will be able to meet the monthly / quarterly payments, then it is advisable to contact the Business Payment Support Line to arrange a payment plan.
For further information please contact your local WK office.
