Penalties for PAYE Accountants

Penalties for PAYE Accountants

As an employer, you normally have to operate PAYE as part of your payroll. PAYE is HM Revenue and Customs’ (HMRC) system to collect Income Tax and National Insurance from employment on or before your employees’ payday

On or before your Employees’ Payday:

Every time you pay your employees, use your payroll software to:

  1. Record their pay – include their salary or wages and any other pay.
  2. Calculate deductions from their pay, like tax and National Insurance.
  3. Calculate the employer’s National Insurance contribution that you’ll need to pay on their earnings above £156 a week.
  4. Produce payslips for each employee (you can use different software if yours doesn’t have this feature).
  5. Report their pay and deductions to HMRC in a Full Payment Submission (FPS).

If you pay an employee less than £112 a week, you usually only need to record and report their pay (unless they have another job or receive a pension).

In the next tax month (starting on the 6th)

You can view what you owe from your FPS online from the 12th.

  1. Claim any reduction on what you’ll owe HMRC (eg statutory pay) by sending an Employer Payment Summary (EPS) by the 19th.
  2. View the balance of what you owe in your HMRC online company account, within 2 days (or by the 14th if you sent the EPS before the 11th).
  3. Pay HMRC by the 22nd (or the 19th if paying by post) – you may have to pay a penalty if you don’t.
HM Revenue and Customs (HMRC) has introduced penalties for employers who report their payroll information late from:
  • 6 October 2014 for employers with 50 or more employees
  • 6 March 2015 for employers with fewer than 50 employees
When penalties are charged

You can get a penalty if:

  • your Full Payment Submission (FPS) was late
  • you didn’t send the expected number of FPSs
  • you didn’t send an Employer Payment Summary (EPS) when you didn’t pay any employees in a tax month
HMRC won’t charge a penalty if:
  • your FPS is late but all reported payments on the FPS are within 3 days of your employees’ payday (this applies from 6 March 2015 to 5 April 2016)
  • you’re a new employer and you sent your first FPS within 30 days of paying an employee
  • it’s your first failure in the tax year to send a report on time (this doesn’t apply to employers who register with HMRC as an annual scheme or have fewer than 50 employees for the tax year 2014 to 2015)
How much penalties to pay:

How much you’re charged depends on how many employees you have.

Number of employees

Monthly penalty

1 to 9


10 to 49


50 to 249


250 or more


If you’re over 3 months late you can be charged an additional penalty of 5% of the tax and National Insurance that you should have reported.

! If you run more than 1 PAYE scheme, you can be charged penalties for each.



HM Revenue and Customs (HMRC) charges late payment penalties on PAYE amounts that aren’t paid in full and on time.

These include:

  • monthly, quarterly or annual PAYE
  • student loan deductions
  • Construction Industry Scheme (CIS) deductions
  • Class 1 National Insurance contributions (NICs)
  • annual payments of employers’ Class 1A and Class 1B NICs
  • determinations made by HMRC where it appears that there may be further tax payable
  • decisions, for example about a person’s liability to pay NICs and the amount payable
How much you pay

Late monthly and quarterly PAYE accountants payments

The first failure to pay on time does not count as a default

Number of defaults in a tax yearPenalty percentage applied to the amount that is late in the relevant tax month (ignoring the first late payment in the tax year)
1 to 31%
4 to 62%
7 to 93%
10 or more4%

Daily interest will continue to accrue on all unpaid amounts from the due and payable date to the date of payment.


You will be charged a late payment penalty if you pay less than is actually due. If you still haven’t paid a monthly or quarterly payment in full after 6 months, you will be charged an additional penalty of 5% of the amounts unpaid. A further penalty of 5% will be charged if you have not paid after 12 months.

These additional penalties apply even where only one payment in the tax year is late.,

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