HMRC have issued further guidance on late payment interest on PAYE and CIS payments for 2014/15 onwards and how to avoid it.
HMRC now charges interest on any late PAYE and Construction Industry Scheme (CIS) payments.
To avoid an interest charge employers should pay by the due date, the difference between the following:
- what they report on their Full Payment Submission(s) (FPS) received by the 19th of the month following the end of the tax month it relates to, together with any CIS charges for that tax month
- any deductions reported on an Employer Payment Submission (EPS), again received by the 19th of the month following the end of the tax month it relates to.
Any corrections made to wages reported on an FPS that HMRC receives after the 19th of the month following the end of the tax month it relates to will be included in the following month’s charge. In these circumstances, the amount payable for the tax month is the amount actually reported by the 19th (rather than the corrected amount).
HMRC will charge interest daily, from the date a payment is due and payable to the date it is paid in full.
Accruing Interest and the Business Tax Dashboard
Employers will be able to see an estimate of the interest building up on the Business Tax Dashboard.
Please be aware that HMRC have stated:
‘Accrued interest is only a guide to what may be due. HMRC will only seek payment of interest when the amount due is settled.
The Business Tax Dashboard will only show interest as accruing in the current month, regardless of when the payment was due.
It will show interest as accruing from the 19th of each month, regardless of how the employer pays. Employers who pay electronically should not worry if they see an accrued interest entry between 19th and 22nd of a month. Once the electronic payment is received, the calculation will correctly use the 22nd as the due date, and any interest charge generated between the 19th and 22nd will be cancelled.
Currently, there is an HMRC systems error which results in the Business Tax Dashboard showing interest accruing despite the employer having submitted an EPS that clears the original charges. This error will be corrected shortly. In the meantime, HMRC will not pursue this charge and employers do not need to contact HMRC about this.
Please do get in touch if you would like help with payroll issues.