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Employers are required to act as tax collectors on behalf of HMRC. Employers are responsible for deducting tax, National Insurance, and, if applicable, student loan deductions from their employees’ pay and remitting these amounts, along with their employer’s contributions to National Insurance, to HMRC. If the payments are made electronically, they must reach HMRC no later than the 22nd of the following tax month. If the payments are made by check, however, they must reach HMRC no later than the 19th of the following tax month.
It is imperative that these deadlines not be missed in order to avoid having to pay penalties for making payments that are overdue for a period of more than one month during the tax year. Employers may have an easier time meeting payment deadlines and avoiding penalties if they use a new facility that allows for recurring direct debits.
Payment options
When it comes to making PAYE payments, businesses can choose from a number of different payment methods at this time. The use of online banking, debit cards, corporate credit cards, or paying in person at a bank or building society are all acceptable forms of payment. It is also possible to send a check through the mail; however, an earlier payment deadline will apply.
It was formerly possible to make a one-time payment using direct debit, but this option is no longer available. This, however, is going to change, and from September 19, 2022, employers will be able to establish a recurring direct debit to pay their PAYE. This is scheduled to take effect.
Payment through variable direct debit
Employers that want to make payments via direct debit on a monthly basis will need to set this up using the Employer’s PAYE Online service and their business tax account.
On the screens that employers use to manage their liabilities and payments, there will soon be a new option that reads “put up a direct debit.” This new option will be available. This will provide HMRC with authority to collect the PAYE and NIC that the employer is obligated to pay, as indicated on their RTI payroll form, directly from the employer’s bank account.
The link will read “Manage your direct debit” whenever an employer has successfully established a mechanism for regular direct debit payments. Because of this, the employer will have the ability to view, modify, or cancel their direct debit online.
It is important to keep in mind that only the employer has the ability to initiate, modify, or terminate the direct debit; this is not something that can be done by the employer’s agent on their behalf.