This page explains how to make payments of tax and National Insurance to HM Revenue and Customs (HMRC).
This section covers the following:
How the payment is calculated
How to deal with negative balances
Paying Class 1A NIC
Paying by post
Late or non payment
What to do if you have paid HMRC the wrong amount
Employers normally have to make payments to HMRC by reference to tax months (although many care and support employers will be able to use the ‘quarterly’ option – more on this below).
The months are:
|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.
You can find more information on paying HMRC on GOV.UK or for paper filers, on page 39 of booklet RT7 – Guidance for employers exempt from filing Real Time Information online.
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|
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)
- 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.
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 £16.96 will be deducted from their gross pay each pay day:
Looking at April, May and June 2017, the employee is paid on the following Fridays: 7, 14, 21 and 28 April and 5, 12, 19 and 26 May and 2, 9, 16 and 23 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 - £67.84 i.e. £16.96 (£11.16 + £5.80) x 4 pay days (12, 19, 26 May and 2 June). This needs to be paid to HMRC by 19 or 22 June 2017, 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.
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.
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.
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.
You must pay Class 1A NIC on certain benefits and expenses. You pay Class 1A NIC 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.
For information on what happens if you are late paying Class 1A NIC, see our 'getting things wrong' section.
PAYE Settlement Agreements (Class 1B NIC) are also paid separately.
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 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:
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 or for paper filers, on page 40 of booklet RT7 – Guidance for employers exempt from filing Real Time Information online.
Please note you can also pay by cheque at your bank, building society or the Post Office.
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 do not need to 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. ’17’ for 2016/17 tax year,‘18’ for 2017/18 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.
An employer’s payment reference is 234MA00012345. He wants to make a payment relating to month 01 in 2017/18.
In order to ensure that a payment for month 01 of 2017/18 is allocated correctly, the employer is required to add 1801 (year first, then the month) to his payment reference, this makes 234MA000123451801.
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 234MA000123451813.
For further information on paying HMRC electronically, including their bank details and their online debit or credit card payment facility see GOV.UK.
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 (known as ‘a time to pay arrangement’) . If you do make an agreement, you may be able to 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 an agreement is made, it is imperative that you meet these payments in full and on time, otherwise your problems could significantly increase. HMRC could immediately cancel the arrangement if you default, calling in the total debt and applying a range of penalties.
For more information on what to do if you have difficulties paying HMRC, see GOV.UK.
You may have heard that in certain circumstances, HMRC can take outstanding PAYE debts directly out of people’s bank accounts. However please let us reassure you that this move is not aimed at care and support employers who have got into difficulty.
You can read more about this in our news item.
If you underpaid because you entered the wrong amount when paying HMRC, pay the balance as soon as possible. If you overpaid because you entered the wrong amount when paying HMRC, or you made a duplicate payment, you can balance your account by paying less in your next PAYE bill.
Further information on what to do if you have paid HMRC the wrong amount can be found on GOV.UK.
For information on what to do if you make other types of mistakes when running your payroll, see our guidance here.