Late PAYE payments face in-year interest for first time

Late PAYE payments will incur in-year interest charges for the first time, HMRC have warned following last month’s introduction of a regime that replaces annual levies.

Firms that want to avoid the new-style charges, which also apply to the construction industry scheme, should settle with the Revenue by the due date – 19th or 22nd of the month – the difference between what they report on their full payment submission (FPS) together with CIS charges for the tax month, and the deductions reported on an employer payment submission (EPS).

If an employers makes a correction on an FPS received by the taxman after 19th of the month following the end of the month it relates to, the correction will be included in the following month’s charge, with the amount payable being the sum reported by the 19th, rather than the corrected amount.

The tax department will charge interest daily, from the date a payment is due to the date it is settled in full. Employers will be able to see an estimate of the interest building up on the business tax dashboard, but it should be noted:

• accrued interest is only a guide to what may be due;
• the dashboard will show only interest as accruing in the current month, regardless of when the payment was due; and
• it will show interest as accruing from the 19th of each month, regardless of how the employer pays.

Once an electronic payment is received, the calculation will correctly use the 22nd as the due date, and interest charge generated between the 19th and 22nd will be cancelled.

An HMRC systems error currently means the business tax dashboard shows interest accruing despite the employer having submitted an EPS that clears the original charges.

The problem is expected to be resolved soon, the tax authority said, and the charge will not be pursued.

Issue: 4452 / Categories: News , CIS , PAYE , real-time information; RTI , Admin , Employees , Income Tax