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BRANAGANS
Accountancy Services Ltd
01709 327 215 | info@branagans.co.uk
April 2025 | PAYE penalties: How late payroll filings could cost your business
Late or inaccurate payroll filings could lead to costly PAYE penalties from HMRC, putting your business at financial risk. Whether it's missing a submission deadline or failing to provide accurate payroll data, errors in Pay As You Earn (PAYE) reporting can result in fines and increased scrutiny from tax authorities.
Under the Real Time Information (RTI) system, most employers must electronically submit payroll data to HMRC every time they pay employees. Failing to file on time-
Understanding PAYE compliance is essential to avoid unnecessary fines. Here's what you need to know to keep your payroll on track.
WILL I BE FINED FOR EVERY LATE PAYE SUBMISSION?
If you don't file your submission on time once, then you won't face a fine. You are allowed one error each year penalty free. But any other late submissions could face a penalty. You can find out how much this might be on GOV.UK.
The fine relates to how many employees you have, but it would be at least £100. Even if you have paid the relevant amount of PAYE or National Insurance Contributions (NICs) but fail to file the paperwork, you could still be fined.
If you are fined for a second missed payment in the same tax year, it would incur a 1% penalty of any PAYE or NICs outstanding, rising to 2% of the tax due for four missed payments, then 3% for seven missed payments and so on.
If you fail to pay any amount of PAYE due within six months, then a penalty of 5% of the outstanding amount will be charged. An additional 5% would be due if the PAYE is still not paid within 12 months. In this case, you would face these penalties on the value of the first PAYE missed payment in a year, even though this wouldn't incur the penalties outlined earlier. There is more information about this on GOV.UK.
However, if the amount owed is less than £100, the LITRG understands that HMRC is unlikely to issue a penalty.
IS IT ONLY PAYE FILINGS THAT CAN BE A PROBLEM FOR BUSINESSES?
Companies must file various returns to HMRC and making errors or failing to file on time will also potentially lead to penalties. Penalties can be applied for the late filing of P11D forms for example, which could be up to £300 as an initial penalty, plus £60 a day for as long as the form isn't filed. This is for each form, so it could become very expensive if you have a lot of employees.
If you file your company's P11D(b) late, you could face a penalty of £100 per 50 employees for every month or part month that this form is filed late. You should also make sure the information on the P11D is correct as any form believed to be filed negligently or fraudulently could face a penalty of up to £3,000. But this would only be expected in the most serious cases, according to the LITRG.
If a taxpayer has a reasonable excuse for missing the filing deadline, then they may not be penalised. A reasonable excuse would include a partner or close relative dying just before or at the time the deadline arrived, a software glitch at the time you were trying to file, or an unexpected hospital stay, among others. Typically, it is anything that you could not have foreseen that prevents you from filing, but HMRC will consider each instance on a case-
You can find out more information about how to appeal any penalties you think may be unfair online at GOV.UK. If you want to find out more about this subject, then you can visit the LITRG website to find more detail, or speak to your accountant who will be able to help.
WE CAN HELP YOU
If you have missed a PAYE or P11D payment or made errors on either and want to be sure you don't face penalties on future filings, then please contact Branagans Accountancy Services. We're here to assist you! Reach out to us today at 01709 327 215 or via email at info@branagans.co.uk.
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