PAYE and NIC Returns

Posted on January 8, 2013

H M Revenue & Customs are now going to levy a penalty and interest charges on late filing of the PAYE and NIC returns. These will be determined at the end of the fiscal year based on the number of late payments and outstanding amounts.

Please see below.

There are a number of ways you can make payments;

  • By cheque, payable to ‘H M Revenue & Customs’
  • or at the Post Office with your payment book,
  • or Online directly using HMRC website.

If Garratts prepare your payroll, then we will notify you of the amounts due for the periods applicable to you or the company.

NB – Quarterly Payments

HMRC have informed us that Nil Returns need to be filed for the intervening 2 months on a “Quarterly Scheme”

This can be done on the HMRC Website;


Penalties are charged on each PAYE reference number (also called a ‘PAYE scheme’) independently.

Therefore, if you operate more than one PAYE scheme you need to make sure that amounts due for each individual PAYE scheme reference is paid in full and on time.

The total penalty charged can be made up of a number of items:

  • a default penalty, for failure to pay monthly/quarterly payments on time and in full
  • penalties for amounts still unpaid after 6 and 12 months

There are also additional penalties for amounts charged annually or occasionally.

The rest of this section explains how the penalties apply for different types of payment.

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. The table below shows how the penalties are calculated.

Penalty charges for late monthly and quarterly PAYE payments

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


No. of defaults in a tax year Penalty percentage Amount to which penalty percentages apply
1-3 1% Total amount that is late in the tax year (ignoring the first late payment in that tax year)
4-6 2%
7-9 3%
10 or more 4%


Example: ABC Ltd paid four payments late in the tax year. The first late payment is not counted as a default therefore they have three defaults in total, which means that a penalty of 1% is due on the total amount of PAYE paid late (excluding the first late payment).

For further details regarding PAYE & NIC payments, or if we can advise on other issues regarding your payroll, please contact Garratts.

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