Paying HMRC

This page explains how to make payments of tax and National Insurance to HM Revenue and Customs (HMRC).

This section covers the following:

General information
How the payment is calculated
How to deal with negative balances
Quarterly option
Paying Class 1A NIC
Paying by post
Paying electronically
Late or non payment
What to do if you have paid HMRC the wrong amount

General information

Employers normally have to make payments to HMRC by reference to tax months.

The months are:

Month Start End
1 6 April 5 May
2 6 May 5 June
3 6 June 5 July
4 6 July 5 August
5 6 August 5 September
6 6 September 5 October
7 6 October 5 November
8 6 November 5 December
9 6 December 5 January
10 6 January 5 February
11 6 February 5 March
12 6 March 5 April

 
Payment must be received by HMRC by:

  • the 19th of each month for those paying by post (a cheque for the total amount due for the month must be received by HMRC Accounts Office with an accompanying payment slip which,
  • the 22nd of each month for electronic payments, e.g. direct debit, debit or credit card, internet/telephone banking and Faster Payments (electronic payments do not have to be accompanied by a payment slip). 

If the due date falls on a bank holiday or at the weekend, payment must be made on the last working day before it. HMRC may charge interest and penalties for late payments

If you are a paper filer and for any period, you have no deductions to remit you should submit an RT5 – Employer Payment Summary so that HMRC knows that no payment should be received and will not send unnecessary reminders or penalty notices. 

If you are an online filer, you should submit an EPS telling HMRC about the ‘nil’ return.

You can find more information on paying HMRC on GOV.UK.

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How the payment is calculated

The payment that you need to make to HMRC will usually be calculated by adding together all:

  • The tax and employees National Insurance contributions (NIC) you have deducted from your employees during the tax month (or quarter)
  • Student Loan deductions you have deducted from your employees
  • Any employer’s NIC that is due from you (after taking into account the Employment Allowance)

then subtracting:

  • Any statutory payments, e.g. Statutory Maternity Pay you are entitled to recover.

If you are an online filer, your payroll software should calculate how much tax and NIC to deduct from your employees’ pay, and then how much you need to pay HMRC (taking into account any reductions on any Employer Payment Summary (EPS)). If you are a paper filer then the tax and NIC totals will be on your RT11.

Example

You pay an employee £250 a week, every Friday. In accordance with the employee’s tax code (1100L) and NIC category letter (A), tax and NIC of £19.09 will be deducted from their gross pay each pay day:

  Gross pay £250.00
Less Employee NIC £11.40
Less Tax £7.69
  Net pay £230.91


Looking at April, May and June 2016, the employee is paid on the following Fridays: 1, 8, 15, 22 and 29 April and 6, 13, 20 and 27 May and 3, 10, 17 and 24 June.

The amount to be paid to HMRC for tax month 2, say, is the amount deducted from the employee in the period 6 May to 5 June – £95.45 i.e. £19.09 (£11.40 + £7.69) x 5 pay days (6, 13, 20 and 27 May and 3 June). This needs to be paid to HMRC by 19 or 22 May 2016, depending on the payment method used. 

Note this example only looks at tax and employee NIC and does not take into consideration any employer NIC, student loan deductions etc. that may also be due.

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How to deal with negative balances

Sometimes, the amount that you owe HMRC for a period will come out as a negative amount.  This can happen for example, where your employee is owed an in-year tax refund based on his/her year to date pay and tax figures.

Typically you would be repaid by HMRC for making a tax refund on their behalf by reducing any other amounts you need to pay over to HMRC for that same period. You can reduce your payment of tax, National Insurance or student loan deductions.

Example

You have two employees and are processing their payroll for tax month 2 (6 May to 5 June). The amount due to HMRC in respect of employee A is -£8.00 and the amount due to HMRC in respect of employee B is £23.77. You therefore need to pay over £15.77 (£23.77 - £8.00).

Where you only have one employee and you owe nothing else to HMRC for the same period, you would normally fund their tax refund by reducing your next payment to HMRC by the amount of the refund.

Example

You have one employee and are processing their payroll for tax month 4 (6 July to 5 Aug). The payments summary in your payroll software shows the following:

Tax period Total payments due to HMRC for each period
1 (6 April to 5 May) £13.12
2 (6 May to 5 June) £20.10
3 (6 June to 5 July) £29.44
4 (6 July 5 Aug) -£11.20
5 (6 Aug to 5 Sept) etc. -


In order to recoup the £11.20 from tax month 4, you would deduct if from the amount that you need to pay to HMRC for tax month 5. (Let us say that tax month 5’s amount due works out as £15.25, then you would only pay £3.05. If tax month 5’s amount due is not sufficient to offset the full amount (e.g. because it is only £10), then you would carry forward the balance to subsequent tax months until it is fully used up.)

Please note that even if, for whatever reason, you had not paid tax month 3’s amount due by the time you work out tax month 4’s amount, you should not reduce tax month 3’s amount – you should only ever reduce a subsequent payment due to HMRC.

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Quarterly option

Employers who expect their average monthly PAYE payment to be less than £1,500 may pay quarterly instead of monthly. This is easily arranged by phoning HMRC’s payment enquiry helpline on 0300 200 3401.

The quarter are:

Quarter Start End Due date – cheque payers Due date – Electronic payers
1 6 April 5 July 19 July 22 July
2 6 July 5 October 19 October 22 October
3 6 October 5 January 19 January 22 January
4 6 January 5 April 19 April 22 April


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Paying Class 1A NIC

You must pay Class 1A NIC on certain benefits and expenses. You pay Class 1A to HMRC separately to other amounts due under PAYE.

You need to pay these contributions by 22 July each year for the previous tax year. You’ll need to pay by 19 July if paying by post.

For more information, see GOV.UK.

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Paying by post

If you pay by post you should:

  • make your cheque payable to 'HM Revenue & Customs only' followed by your Accounts Office reference
  • include the payment slip fo the correct period (found in the payment booklet which should be supplied by HMRC)
  • send your cheque and payment slip to HMRC using the pre-addressed envelope if you were sent one, or use the address below
  • do not fold the payment slip or cheque and do not fasten them together

Please allow at least three working days for the payment to reach HMRC to allow for any delays in the post. So continuing the example above, in order to make sure a cheque for the PAYE you owe reaches HMRC by the 19th May (a Thursday), you should post it no later than Friday 13th May.

If you do not have a pre-addressed HMRC envelope you can send your payment to:

HMRC
Direct
BX5 5BD

If you do not have any of the pre-printed payment slips that come in your payment booklet, you can make one here and send it with your cheque so that HMRC can allocate the payment properly.

You can find more about paying HMRC by post on GOV.UK.

Please note you can also pay by cheque at your bank, building society or the Post Office.

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Paying electronically

HMRC recommends that you pay electronically rather than by cheque. You can pay electronically even if you manage the rest of your payroll tasks manually (on paper). Provided you use the right reference number, electronic payments are more efficient and secure than sending cheques by post.

The reference number will consist of your 13 character Accounts Office reference.

Depending on when you make your payment to HMRC you may also need to tell them the year and the month you are paying. If you pay on time, HMRC will know where to allocate the payment, so strictly you don't need to do tell them the year and the month (although if you want to, to be on the safe side, then that is fine). HMRC consider an ‘on time’ payment as one that clears into their account between the 6th and the 22nd of the month following the end of the tax month to which it relates (if you are a quarterly payer, an ‘on time’ payment is one that clears into their account in the 2nd or 3rd tax month of the quarter, or between the 6th and the 22nd of the month following the end of the tax quarter to which it relates).

If you are paying late (or early) you will need to help them by adding the year and month. You do this by adding 2 digits for the tax year, e.g. ’15’ for 2014/15 tax year,‘16’ for 2015/16 tax year and 2 digits for the tax month, e.g. ’01’ for month 1 (6 April to 5 May) etc.

This makes sure your payment is assigned correctly and you will not get reminders after you have paid.

Example

An employer’s payment reference is 234MA00012345. He wants to make a payment relating to month 01 in 2016/17.

In order to ensure that a payment for month 01 of 2016/17 is allocated correctly, the employer is required to add 1701 (year first, then the month) to his payment reference, this makes 234MA000123451701.

The easiest way to check you are using the correct reference is to use HMRC's online reference checker.

Please note that if you are paying Class 1A NIC, the last two digits should always be 13. So continuing the example above, if that employer also needed to make a payment of Class 1A NIC for the tax year 2016/17, the reference would be 234MA000123451713.

For further information on paying HMRC electronically, including their bank details and their online debit or credit card payment facility see GOV.UK.

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Late or non-payment

You may have to pay late payment penalties and interest if you do not pay your PAYE tax/ Class 1 NIC, etc. to HMRC on time and in full. Late payment penalties and interest apply to all employers. You can find more information about penalties and interest on our website here.

You may be having cash flow difficulties causing the late or non-payment of what you owe HMRC. If this is the case, you should contact the Business Payment Support Service as soon as you can, as they may be able to arrange a payment plan with you. If you do make an agreement before the due date, you can avoid penalties for the particular period or periods covered, providing you keep to the terms of the arrangement. But you will still have to pay interest on any amounts paid after the year's end.

If you cannot make a particular payment to HMRC but do not contact the Business Payment Support Service before the payment becomes due, then if you have not yet been contacted by HMRC, you should still contact the Business Payment Support Service to reach a payment arrangement. It's likely that you will have to pay penalties and possibly interest, but you will be able to avoid further penalties or legal action for that PAYE period (or periods) if you make, and keep to, a payment arrangement.

For more information, see GOV.UK.

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What to do if you have paid HMRC the wrong amount

Information on what to do if you have paid HMRC the wrong amount, e.g. because you made a duplicate payment by mistake, can be found on GOV.UK

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