Employers are being hammered again. This time it’s for in-year interest charges on late PAYE payments.
In April 2013 RTI radically changed the way employers report payroll and CIS data to HMRC. With it came the threat of penalties for not submitting reports on time. These were due to be introduced in April 2014, but have been postponed until October. However, in-year late payment interest has applied from 20 May 2014.
For 2014/15 onwards HMRC will charge interest from the day after payment was due, which is the 19th of each month. For example, interest is charged on late paid PAYE etc. for the tax month of May, which ended on 5 June, if payment hasn’t been received by HMRC by the end of the 19 June. HMRC’s interest rate on overdue payments is currently 3% per annum.
Consider paying electronically. Not only does it give you greater certainty that a payment has reached HMRC, but the payment due date is extended by three days to the 22nd of each month
HMRC insists that if you pay on time you’ll have no problem. The reality is likely to be very different. Over the last year HMRC has made a total hash of keeping its PAYE records in order. There have been countless cases where HMRC’s records haven’t tied up with employers’. While it has overhauled its system it’s yet to be tested.
Ensure PAYE etc. payments reach HMRC by the 19th of each month. If you pay electronically, the deadline is extended by three days. Registering to use HMRC’s online Dashboard will help you keep track of payments.