Avoiding Interest Charges on Late PAYE Payments

SMEs Payments

When Real Time Information (RTI) was introduced in April 2013, it was expected that employers would take a while to adjust to the new type of reporting. Therefore, to help employers make the transition, penalties that were going to be applied to late submissions, were postponed until October 2014. However, with RTI changing the way employers report payroll and CIS data, it has enabled HMRC to charge interest on any late payments, such as late paid PAYE. These interest charges have not been postponed.

From 20 May 2014, interest will be charged on any late PAYE payments. The penalty applied is a percentage of the missed or late payment, currently this is 3% per annum, and it kicks in the day after payment is due. Therefore, if HMRC do not receive payment by the 19th of each month, companies will be charged interest. For example, interest will be charged on any late payments for the tax month of June, if payment is not received by HMRC by the end of the 19th July. Previously, companies had until the end of the tax year, 19 April, to bring their payments up-to-date.

The easiest way to avoid the interest is to register to use HMRC’s online Dashboard. HMRC have introduced this system to allow employers to keep track of payments. It also allows employers to pay electronically, extending the deadline by three days. Employers, therefore, can report PAYE information up until 22nd of each month, which may not seem much, but does give employers some leeway. HMRC have insisted that employers who pay on time will not encounter any problems. We therefore highly recommend you pay electronically and register for HMRC’s online dashboard.

Related News Articles:
RTI penalty let off for some employers
Related Blogs:
PAYE Penalties – The Grace Period is Up
RTI – Temporary Relaxation for Micro Employers