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Penalties on PAYE and NIC

HMRC has issued a note setting out its position on charging penalties on PAYE amounts that are paid late.

For these purposes PAYE includes:

  • 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.

The first failure to pay on time does not count as a default.  Thereafter the penalty position and rates are:

Number of defaults in a tax year Penalty
1-3 1%
4-6 2%
7-9 3%
10 or more 4%

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

A further 5% is charged if payment is 6 months late and a further penalty of 5% will be charged if you have not paid after 12 months.

These additional penalties apply even where only 1 payment in the tax year is late.



Date: 8th September, 2014
Author: Cathy Corns


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