How and When to Pay HMRC PAYE (and What Happens If You’re Late)

Paying HMRC PAYE is the final step in your payroll process. It involves sending HMRC the Income Tax, National Insurance and any other payroll deductions your business owes.

Paying the correct amount on time is important because unpaid PAYE can accumulate and become more expensive: HMRC can charge interest on late payments and add penalties if payments are repeatedly late or remain unpaid for several months.

This guide explains when to pay PAYE, how to work out the amount due, which payment methods you can use and what happens if you pay late.

For more information about payroll deductions and reporting, see our guide to PAYE for employers.

When do you pay PAYE to HMRC?

Most employers pay HMRC PAYE monthly. A PAYE tax month runs from the 6th of one calendar month to the 5th of the next. If you pay electronically, the amount for that tax month must normally reach HMRC by the 22nd of the following month. If you pay by cheque through the post, it must reach HMRC by the 19th.

For example, payroll liabilities arising during the tax month from 6 May to 5 June are normally due by 22 June if you pay electronically.

The deadline is for when HMRC must receive the payment, rather than when you start the transaction.

What happens when the payment date falls on a weekend or bank holiday?

For payment methods that need cleared funds to reach HMRC, arrange the payment early enough for it to arrive by the previous working day when the deadline falls on a weekend or bank holiday.

Faster Payments are an exception because they can usually reach HMRC on the same or following day, including weekends and bank holidays. HMRC also treats online debit and corporate credit card payments as made on the date you make them, including weekends and bank holidays.

So if your business pays manually, check both the PAYE deadline and the processing time of the payment method you’re using.

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Can you pay PAYE quarterly instead of monthly?

Some smaller employers can pay PAYE quarterly.

HMRC says this option can apply if you have reasonable grounds to expect your average monthly payment to be less than £1,500, or less than £18,000 over the full tax year. HMRC advises employers that want to pay quarterly to contact its payment helpline.

The quarterly electronic deadlines are:

Cheque payments are due by the 19th instead.

Quarterly payment only changes how often you send the money to HMRC. You still report payroll according to the normal PAYE reporting rules. If you use automatic Direct Debit, HMRC says you should continue submitting monthly returns, and it will collect the total payment every three months.

How to pay PAYE to HMRC step by step

Once payroll has been processed and your HMRC balance is ready, the payment process is fairly short.

Step 1: Check your PAYE balance

Sign in to your HMRC online account and check what is due.

Reconcile the amount against your payroll records, particularly if you have submitted an EPS or corrected payroll information.

Step 2: Find your Accounts Office reference

For a normal PAYE payment, you will usually need your 13-character Accounts Office reference.

You can find it in your HMRC online account or on the letter HMRC sent when you registered as an employer. Enter it without spaces when using it as a payment reference.

This is different from your employer PAYE reference.

If those references are unfamiliar, our main PAYE for employers guide explains what each one is used for.

Step 3: Choose your payment method

You can pay employers’ PAYE using several methods, including:

• automatic Direct Debit
• payment through your online bank account
• Faster Payments
• CHAPS
• Bacs
• personal debit card
• corporate debit or credit card
• cheque through the post, if eligible

The main difference between these payment methods is how quickly your payment reaches HMRC and how much manual work they create (or save you) each month.

Step 4: Make the payment early enough

It makes sense to work backwards from the date HMRC needs the money. Faster Payments usually arrive on the same or following day of making the payment. CHAPS usually arrives on the same working day if you meet your bank’s processing times, while Bacs can take up to three working days.

Check your bank’s transaction limits too. Payroll liabilities can quickly become larger than the limits used for ordinary business payments.

Step 5: Check that HMRC has allocated the payment

Keep the payment confirmation and check your PAYE account afterwards. This is particularly useful if you made an early or late payment, paid more than one PAYE scheme or had an unusual balance that month.

What happens if you pay PAYE late?

When you pay HMRC PAYE late, a late PAYE payment can create two separate costs: interest and late payment penalties.

For interest, which is linked to how long the money remains unpaid, the standard monthly and quarterly PAYE penalty system looks at your pattern of late payments across the tax year. Extra penalties can apply when a balance remains outstanding (unpaid) for six or twelve months.

HMRC interest on late PAYE payments

HMRC charges interest daily on unpaid PAYE from the date the money became due until the date it is paid in full.

The interest rate changes over time. As of 3 September 2026, HMRC’s late payment interest rate for the main taxes and duties covered by the rate, including Income Tax and National Insurance, is 7.75%. That rate has applied since 9 January 2026.

Because interest runs daily, paying a late balance sooner reduces the amount that builds up.

HMRC’s online PAYE account can show accruing late-payment interest, although HMRC describes the accruing figure as a guide until the liability is settled.

You cannot formally appeal an interest charge in the same way that you can appeal a penalty. If you think HMRC has calculated interest incorrectly, HMRC says to contact the issuing office and explain why.

Late payment of PAYE penalties explained

For ordinary monthly and quarterly PAYE payments, HMRC counts how many times you fail to pay the full amount on time during the tax year.

The first failure to pay on time does not count as a default for the standard late payment penalty calculation.

After that, the penalty rate increases according to the number of defaults:

The first late payment is ignored when counting those defaults.

Which payments are subject to PAYE late payment penalties?

HMRC can charge late payment penalties when certain PAYE and National Insurance liabilities are not paid in full and on time. The rules cover more than your regular monthly PAYE bill and can apply to:

• Monthly, quarterly or annual PAYE payments: Income Tax, National Insurance and other PAYE liabilities due from your payroll.
• Student loan deductions: Repayments deducted from employees’ pay and passed to HMRC.
• Construction Industry Scheme (CIS) deductions: Tax deducted from payments made to subcontractors under the CIS.
• Class 1 National Insurance contributions: Employee and employer NICs due through payroll.
• Class 1A and Class 1B National Insurance: Annual employer NIC liabilities, including amounts connected with taxable benefits and PAYE Settlement Agreements.
• PAYE Settlement Agreements (PSAs): Annual payments covering tax and National Insurance on certain minor, irregular or impracticable employee expenses and benefits.
• HMRC determinations: PAYE amounts HMRC determines are due, for example where it believes further tax should have been paid.
• HMRC decisions on National Insurance: Formal decisions about whether NICs are due and how much must be paid.

The penalty rules differ depending on the type of liability. Monthly and quarterly PAYE follows the default-based penalty system, while annual or occasional liabilities such as Class 1A and Class 1B NICs can be subject to separate 5% penalties if they remain unpaid after the relevant penalty dates.

How to avoid late PAYE penalties

Most late PAYE problems can be avoided with a clear payroll routine and enough time to check the figures before the deadline.

To help avoid late PAYE fines, keep these things in mind:

• Set internal payment deadlines: Do not rely on the date (22nd) itself. Give your team a few extra days to check and approve the payment.
• Use automatic Direct Debit where suitable: HMRC can collect regular PAYE liabilities automatically based on your payroll returns.
• Check your PAYE balance before paying: Compare HMRC’s figure with your FPS, EPS and payroll records.
• Keep payroll information up to date: Salary changes, starters, leavers and benefits can all affect what you owe. A salary review, for example, needs to reach payroll before the relevant pay run.
• Use the correct payment reference: Normal PAYE payments usually use your 13-character Accounts Office reference.
• Allow for bank processing times: Bacs takes longer than Faster Payments, so choose your payment method early enough.
• Plan for staff absences: Make sure someone else can approve the payment if the usual payroll or finance contact is unavailable.
• Check your HMRC account regularly: This makes it easier to catch unexpected balances or payment allocation problems early.

Payroll software can reduce manual work, but the figures and payment still need to be checked.

What happens if you cannot pay PAYE?

If your business cannot pay its PAYE bill in full, contact HMRC as soon as possible.

You may be able to agree a Time to Pay arrangement and repay the debt in monthly instalments.

While PAYE remains unpaid:

• Interest can continue to build.
• Late payment penalties may apply.
• HMRC may contact you about the debt.
• Some repayments or tax credits may be used against what you owe.
• HMRC can take enforcement action if the debt remains unresolved.

This can eventually include debt collection, court action and, in serious cases, insolvency proceedings.

Can you delay employee pay if the business is short of cash?

You can not use delayed wages as a way to deal with a PAYE problem. Employees and workers must be paid according to their agreed terms. If wages are paid late, this can amount to a breach of contract. If a payroll or banking problem causes a delay, tell employees quickly and correct it as soon as possible. Any PAYE debt already owed to HMRC still needs to be dealt with separately.

What to do if your PAYE payment is late

If you miss a PAYE deadline, deal with the outstanding amount as soon as you can. Late payment interest can continue while the balance remains unpaid.

1. Check what you owe

Compare your HMRC PAYE account with your payroll records.

Check:

• the original liability
• payments already made
• FPS and EPS submissions
• any interest or penalties
• whether a payment has been allocated to the wrong period

If the figures do not match, find the cause before making another payment.

2. Pay the overdue amount

If you can pay in full, do so as soon as possible.

Check the payment reference carefully, especially if you are paying an older liability.

3. Contact HMRC if you cannot pay in full

If the business cannot clear the debt, contact HMRC about a Time to Pay arrangement.

Be ready to explain what the business can afford and provide information about its finances.

4. Check for penalties

Interest and PAYE penalties are separate. Further late payments can attract penalties, and extra charges can apply if amounts remain unpaid for six or twelve months.

5. Appeal if the penalty is wrong

You can appeal if you believe a penalty was charged incorrectly or you had a reasonable excuse for paying late.

For example, an appeal may be appropriate if you paid on time but HMRC allocated the payment incorrectly.

6. Fix the cause of the delay

Once the payment is dealt with, find out why it was late.

It could be caused by a late payroll sign-off, missing approval, the wrong bank transfer method or a staff absence.

Fixing that specific problem is more useful than adding another general reminder.

For more on how reporting and payments fit together, see our guide to PAYE for employers.

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In order for payroll to be correct and HMRC PAYE payments to be on time, you need to have a clear overview of up-to-date salaries, employee details, absences, expenses and more. When records are spread across different spreadsheets, inboxes and systems, payroll teams spend more time checking which version is the most current one. AI business management platforms like Factorial can help you manage HR, finance, and IT processes from one place, saving you time and effort so that you can focus on more strategic issues. Request a demo of Factorial to see how it can help your organisation.