Do you find the process of paying Employers’ PAYE with Direct Debit a bit confusing? You’re not alone, and this guide aims to make the process as straightforward as possible.
Overview
Employers Pay As You Earn (PAYE) is a significant responsibility that employers must undertake as part of their payroll process. Using Direct Debit to manage these payments can ease this burden significantly. This guide breaks down everything you need to know about paying Employers’ PAYE with Direct Debit through HM Revenue and Customs (HMRC).
Setting Up Direct Debit for Employers’ PAYE
Pay Your Bill Automatically
Setting up a Direct Debit to pay your PAYE bill automatically is quite convenient. With this option, HMRC will automatically collect the payment from your bank account, simplifying payroll management. To get started, you will need to set up the Direct Debit through your HMRC online account at least four working days before your payment due date.
Key Points to Remember:
- Automatic Collection: HMRC will collect the payment based on the amount specified in your return, also known as the Full Payment Submission (FPS).
- One-time Setup: Once the Direct Debit is set up, you won’t need to set it up again unless you have not used it for two years or more.
- Quarterly Payments: If you pay quarterly, continue to submit a monthly return, and HMRC will collect the total payment every three months.
- Notification: HMRC will inform you of the date and amount no later than three working days before the payment is collected.
- Bank Statement Reference: Payments will appear on your bank statement as ‘HMRC SDDS’.
When You Can Use This Type of Direct Debit
You can use this automatic Direct Debit to pay specific charges, including:
- Full Payment Submission (FPS)
- Employer Payment Submission (EPS)
- Construction Industry Scheme (CIS)
- Apprenticeship Levy (AL)
- Class 1A National Insurance
- Earlier Year Update
However, it cannot be used for paying interest, penalties, or return payments exceeding £20 million. Alternative payment methods will be required in those cases.
Making a Single Payment
If you prefer making a single payment each time, you can also set up a Direct Debit for this purpose. This process requires setting up the payment through your HMRC online account. Be sure to set it up at least:
- 5 working days before your return due date for the first time.
- 3 working days before your return due date for subsequent payments using the same bank details.
Payments will show on your bank statement as ‘HMRC NDDS’.
Making an Online or Telephone Bank Transfer
For those preferring not to use Direct Debit, online or telephone bank transfers are viable alternatives. This method, while more manual, gives you control over each payment.
Steps for Online Bank Transfer:
- Add Payee: In your online banking, add HMRC as a payee.
- Payment Details: Enter the amount you wish to transfer and the required payment reference number. This number can be found in your HMRC online account or the letter sent when you registered as an employer.
- Confirm: Authenticate and confirm the payment.
Paying By Debit or Corporate Credit Card Online
HMRC also accepts payments by debit or corporate credit card online. Although convenient, this method may incur additional processing fees, especially for credit card payments.
Steps for Card Payments:
- Go to HMRC’s Payment Portal: Access the online payment service on the HMRC website.
- Enter Details: Provide your card details, payment amount, and payment reference number.
- Authenticate: Follow the steps to authenticate and complete your payment.
Sending a Cheque Through the Post
If you prefer traditional methods, sending a cheque through the post is also an option, though it’s less commonly used due to the slower processing times.
Steps to Send a Cheque:
- Write a Cheque: Make the cheque payable to ‘HMRC’.
- Include Reference: Write your 13-character accounts office reference number on the back of the cheque.
- Mail: Send the cheque to the address provided by HMRC for postal payments.
Reference Numbers for Payments
Ensuring you use the correct reference number when making payments is crucial to avoid delays.
Using the Correct Reference Number:
- 13-character Reference: Your 13-character accounts office reference number is essential for all PAYE payments.
- Adjustments for Timing: Add extra numbers for early or late payments:
- Early Payment: Before the 6th of the tax month or quarter.
- Late Payment: On or after the 5th of the tax month following the due date.
Incorrect reference numbers can lead to delayed processing of your payments.
Checking if Your Payment Has Been Received
After making a payment, it’s natural to want to confirm that it has been properly processed by HMRC.
How to Check:
- Log in to HMRC Online Account: Check your account summary.
- Bank Statements: Verify the deduction from your bank account.
- Contact: If uncertain, contact HMRC for confirmation.
Informing HMRC if No Payment is Due
If there are periods when no payment is required, inform HMRC to avoid unnecessary follow-ups and potential late payment notices.
Steps to Inform:
- Access your HMRC online account.
- Navigate to the payroll section.
- Select the option to notify HMRC of no payment due.
Common Issues and Troubleshooting
Direct Debit Setup Issues
If you encounter problems while setting up Direct Debit, ensure that:
- Your bank supports Direct Debit.
- The account details entered are correct.
- The setup is done well within the stipulated timelines.
Payment Not Seen in Account
Cross-check the reference number used and contact your bank and HMRC if the payment doesn’t reflect in your HMRC account or bank statement within the expected timeline.
Incorrect Payments
If an incorrect amount is debited, immediately contact HMRC and your bank to rectify the mistake.
Final Tips for Efficient PAYE Management
- Stay Organized: Keep detailed records and ensure timely submissions of all returns.
- Use Reminders: Set reminders for payment due dates to prevent late submissions.
- Consult a Professional: If the process feels overwhelming, consider consulting a payroll specialist or accountant.
Understanding these payment methods and staying organized can significantly ease payroll management and ensure compliance with HMRC requirements.
Do you have any further questions or need clarification on specific points? This guide aims to provide a comprehensive overview to make your PAYE payments as seamless as possible.