The late payment of income tax, National Insurance Contributions (NIC), student loan deductions and income tax due under the Construction Industry Scheme (CIS) can lead to penalties for employers and contractors of all sizes. With so much to think of when running a business, forgetting to pay your PAYE bill on time each period, can end up costing you.
Penalties for overdue payments:
Your bill must be paid by the 22nd of the next tax month if you pay monthly or by the 22nd after the end of the quarter if you pay quarterly. It can be easy to forget to pay on time, especially if you pay by card online, by Bacs or by cash or cheque at your bank, as with these methods you will need to allow 3 business days for your payment to process. If you are paying by direct debit for the first time you will need to give 5 business days for your payment to process and once set up, this method takes 3 business days to process. The waiting time for payments to process means payment deadlines can easily be missed, especially when weekends and bank holidays need to be considered.
Your payroll software should facilitate the recording of payments made to HMRC. BrightPay is a payroll software which has a HRMC Payments tab from which you can view a detailed summary of your tax, NIC and student loan liabilities for the current period. From here you can also add any CIS deductions, tax refunds from HMRC or any funding from HMRC which may apply. Your amount due to HMRC will be displayed, and once a payment has been made, you can enter the amount paid and payment date.
Having this function in the payroll software serves as a reminder to payroll processers to send their payments to HMRC.
As mentioned above, certain methods of making payment to HMRC can take between 3 to 5 business days to process. If the deadline falls on a weekend or bank holiday you must make sure your payment reaches HMRC on the last working day before it. The only method of payment that can guarantee same day payment to HMRC, even on the weekend or bank holidays, is when you make payment by Faster Payments.
New to BrightPay this year is an integration with payments platform Modulr. Since March, our customers have been using this integration to pay their employees directly from the payroll software. Now, we have added a feature which allows you to pay HMRC directly from the payroll software through Modulr, using the Faster Payments method. This means that with a few simple clicks within the payroll software, you can have your payments sent and received by HMRC in under two minutes. The simplicity and convenience of using this method over others means that payments can be made at the eleventh hour, without having to worry about penalties for overdue payments.
Book a free BrightPay demo today and learn how BrightPay can help you avoid penalties, stay compliant and make running payroll as easy as possible.