Businesswoman in white shirt sat at laptop | How to pay PAYE online

Contents

  1. 1. How to pay your PAYE bill
  2. 2. What is PAYE?
  3. 3. What’s included in my PAYE bill?
  4. 4. Before you pay your PAYE bill
  5. 5. Ways to pay your PAYE bill
  6. 6. How to pay PAYE online
  7. 7. Alternative ways to pay PAYE
  8. 8. When do I need to pay my PAYE bill?
  9. 9. PAYE late payment penalties

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The Ultimate Guide to Paying Your PAYE Bill

March 16, 2022
This article was updated 22nd March 2023.You’ve made your first hire, set up your payroll software and have been served your first PAYE bill from HM Revenue and Customs (HMRC). What next?From breaking down what's included in your bill to getting the cash you owe over to HMRC on time, we’ll be covering everything you need to know about paying your PAYE bill.

How to pay your PAYE bill

Pressed for time? You can find a summary of paying PAYE online or by post in the video below.

What is PAYE?

Before we dive into paying your PAYE bill, it’s worth taking a step back to establish what PAYE actually is. PAYE — the abbreviated version of its full moniker ‘Pay As You Earn’ — is the system used by HMRC to collect Income Tax and National Insurance from employed workers.

Through this system, Income Tax and National Insurance contributions (NICs) are collected ‘at source’ from your employees’ pay packets, with the amount left over amounting to their total take-home pay.

What’s included in my PAYE bill?

Your PAYE bill is made up of all tax deductions taken from your employees’ pay packets, and may include the following:
    Employee Income Tax deductions — the total amount your employees pay in Income Tax is determined by the tax rate of the tax bracket they fall under Class 1 and 1B National Insurance Class 1A National Insurance on termination awards and sporting testimonials Student Loan repayments Construction Industry Scheme (CIS) deductions Your Apprenticeship Levy payments if you, or employers you’re connected to, have an annual pay bill of more than £3 million Class 1A National Insurance paid on employee work benefits is paid separately.

Before you pay your PAYE bill

You’ll typically be issued a Government Gateway ID when you register as an employer online, which you can use to set up a PAYE Online account with HMRC. Once you've registered as an employer, HMRC will send you a PAYE reference number, which you'll need to run your payroll.You’ll need your PAYE Online service to:
    Check the amount of tax you owe HMRC Pay your bill See your payment history Access employees’ tax codes and notices about your employees Appeal a penalty Get alerts from HMRC when you report or pay late, or do not send the expected number of reports a month Send expenses and benefits returns such as P46 (car), P11D and P11D(b)
You can also log in to view the following information about your employees:
    Tax code notices (P6 and P9) Student loan notices (SL1 and SL2) National Insurance verification notices (NVR and NOT) Late reporting and late payment alerts (HMRC call these ‘generic notifications’)
Your PAYE login details will need to used by payroll software to submit reports to HMRC, but cannot be used to send the reports itself (excluding expenses and benefits returns).
With Ember, we'll send all your Real Time Information (RTI) over to HMRC in just a couple of clicks — no effort required.

If you need to process salary payments before you've received your PAYE reference number from HMRC, you'll need to:
    Run payrollStore a Full Payment Submission (FPS)Send a late Full Payment Submission to HMRC

Ways to pay your PAYE bill

Before you settle on a payment method, be aware of how long it might take for it to process. With this in mind, you can pay your PAYE bill online or in person in one of the following ways:
Time to payPayment method
Same or next dayOnline or telephone banking (Faster Payments), CHAPS or through online bank account
3 working daysDebit or corporate credit card online, Bacs, at bank or building society (cash or cheque), Direct Debit, by cheque in post
5 working daysDirect debit (if you haven't set up a direct debit before)

How to pay PAYE online

Online bank account

You can pay your PAYE bill directly using your online or mobile bank account. Simply head over to HMRC’s PAYE payment portal, select the ‘pay by bank account’ option and approve the payment on your online or mobile banking account.
Payments through this method are usually instant, but it can take up to 2 hours for the transaction to show in your account.

Faster Payments, CHAPS or Bacs

If you plan to pay your PAYE bill online or by a telephone bank transfer, you can do so using Faster Payments, CHAPS or Bacs.To do this, you’ll need to use your 13-character accounts office reference number as the payments reference. This can be found on either:
    The letter HMRC sent you when you first registered as an employerThe front of your payment booklet or the letter from HMRC that replaced it
To make your payments, HMRC’s bank details to make the transfer are as follows:
Sort codeAccount numberAccount name
08 32 1012001039HMRC Cumbernauld
If your account is overseas:
Account number (IBAN)Bank identifier code (BIC)Account name
GB 62 BARC 201147 70297690BARCGB22HMRC Cumbernauld
Payments made by Faster Payments and CHAPS will usually reach HMRC the same working day, whereas if you pay PAYE by Bacs, payments will usually take 3 working days. We recommend checking your bank’s transaction limits and processing times before proceeding with your payment.
If you make your payments earlier than the 6th of the tax month where payment is due or later than the 5th of the tax month after payment is due, you’ll need to add a few extra numbers to your reference number. You can work out the number you need to use with HMRC’s current year reference checker.

Debit or corporate credit card

If you decide to pay using your corporate card, keep in mind that there is a non-refundable fee that comes with paying HMRC this way. To avoid having to pay a fee, you can pay using your personal debit card — you cannot, however, pay using your personal credit card.

Direct Debit

If you haven’t set up a direct debit to HMRC beforehand but plan to pay PAYE online this way in future, make sure you’ve set aside at least 5 working days to pay for the transaction to go through.

Alternative ways to pay PAYE

At your bank or building society

If you'd rather not pay PAYE online, you can make a payment at your bank or building society. You’ll need to make the cheque payable to ‘HM Revenue and Customs only’ and write your 13-character accounts office reference number on the back.You’ll need to pay in using the payslip for the correct period. If you don’t have this to hand, you can ask HMRC to send you a payment booklet.

Through cheque in the post

If you have less than 250 employees, you can pay your PAYE bill through cheque in the post. Much like paying at your bank or building society, you’ll need to make your cheque payable to ‘HM Revenue and Customs only’ and write your 13-character accounts office reference number on the back.You’ll need to include the payslip for the correct period. If you don’t have this, you can either:
    Ask HMRC to send you a payment bookletPrint off a replacement payment slip
You can include a letter with your payment to ask HMRC for a receipt. However, to ensure your payment goes through successfully, do not fold the payslip or cheque, or fasten any of the documents enclosed together.

When do I need to pay my PAYE bill?

You must pay PAYE online by:
    22nd of the next tax month if you pay on a monthly basis22nd after the end of the quarter if you pay quarterly — for example, 22nd July for the 6th April to 5th July quarter
If you aren't paying PAYE online, the payment deadline if you pay by cheque in the post is the 19th.
If you usually pay less than £1,500 per month, you may be able to pay quarterly instead of monthly — contact the PAYE payment helpline to see if you’re eligible.

PAYE late payment penalties

If you fail to pay your PAYE bill in full by the due date, you may be charged a late payment penalty by HMRC. You may be fined for missing the due date for any of the following:
    Monthly, quarterly or annual PAYEStudent loan deductionsConstruction Industry Scheme (CIS) deductionsClass 1 National Insurance contributions (NICs)Annual payments of employers’ Class 1A and Class 1B NICsDeterminations made by HMRC where it appears that there may be further tax payableDecisions, for example about a person’s liability to pay NICs and the amount payable
The first missed payment won’t count as a default, but any missed payments after this will lead to a interest being added on top of the outstanding amounts every day from the original due date to the date you pay the amount in full.
Number of defaults in a tax yearPenalty percentage applied to the amount that is late in the relevant tax month (ignoring the first late payment in the tax year)
1 to 31%
4 to 62%
7 to 93%
10 or more4%
To avoid paying any interest on late payments, you’ll need to pay within 30 days on being handed your penalty notice from HMRC.

Can I appeal a penalty?

If you’ve been issued a penalty that you don’t agree with, you can appeal against the penalty through HMRC’s PAYE for employers service. You can give one of the following reasons as grounds for appeal:

    Data on the returns was incorrectDeath or bereavementFire, flood or natural disasterIll healthIT difficultiesYou no longer have any employeesYou have no payments to issue to employeesThe bill was paid on timeTheft or crimeTime to Pay (TTP) arrangement in place
Keep in mind that you cannot appeal against an interest charge, so if you want to appeal a penalty, it’s best to do so as soon as it’s issued.

What if I can’t afford to pay my PAYE bill?

If you can’t afford to pay your PAYE bill, get in touch with HMRC as soon as you can. From there, you can arrange a Time to Pay (TTP) agreement, where you break your PAYE bill down into more manageable chunks.
Rachel Cameron-Potter
Rachel Cameron-PotterContent Marketer

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