Guidance

Interest on late payment of PAYE and CIS: employer guide

Information for employers on how interest is charged on PAYE and Construction Industry Scheme (CIS) payments made late.

When interest is charged

HM Revenue and Customs (HMRC) charges interest on any late PAYE and Construction Industry Scheme (CIS) payments. This is to compensate the Exchequer for late payment and to provide a measure of fairness to those taxpayers who pay what is due on time.

HMRC will charge interest on all unpaid:

  • PAYE tax, Class 1 National Insurance contributions (NICs) and student loan deductions including specified charges
  • CIS charges
  • in-year late filing penalties, which start from October 2014
  • in-year late payment penalties, which will be charged automatically from April 2015
  • any amount payable for month 12 tax year 2013 to 2014 which is still outstanding after 19/22 April 2014
  • underpayments that arise because of an adjustment reported on an Earlier Year Update (EYU) submitted in respect of tax year 2014 to 2015 onwards
  • annual payments such as Class 1A and Class 1B NICs which remain unpaid after the due date

How much you pay

HMRC will charge interest daily, from the date a payment is due and payable to the date it is paid in full. Current interest rates are set out at HMRC interest rates.

Charge Interest is charged from
PAYE tax, Class 1 NICs, student loan deductions and CIS payments 19th of relevant month/quarter for all cheque payments, 22nd of relevant month/quarter for all electronic payments
EYU 19th April for all cheque payments, 22nd April for all electronic payments
Tax year 2013 to 2014 month 12 underpayments 19th April for all cheque payments, 22nd April for all electronic payments
Penalties Relevant due date of the penalty charge
Class 1A NICs charges 19th of July for all cheque payments, 22nd of July for all electronic payments
Class 1B NICs charges 19th of October for all cheque payments, 22nd of October for all electronic payments

Accrued interest is only a guide to what may be due. Interest is charged when the amount due is settled. Interest is shown as accruing from the 19th of each month, regardless of how the employer pays. Employers who pay electronically will see an accrued interest entry between 19th and 22nd of a month. Once the electronic payment is received, the calculation will correctly use the 22nd as the due date, and any interest charge generated between the 19th and 22nd will be cancelled.

HMRC will apply repayment interest where you make a payment and the charge is then reduced resulting in an overpayment which is either reallocated to a later charge or repaid.

Find out what is due

Your online PAYE account will be updated regularly to show the amount of any charged or repayment interest that is building up or due as follows:

  • late payment Interest (due or paid) will appear at the bottom of the month in which the interest charge was made
  • accruing late payment interest will appear at the bottom of the current tax month - accrued interest is only a guide to what may be due
  • repayment Interest to be paid will appear at the bottom of the current tax month
  • repayment Interest already paid will appear at the bottom of the tax month in which it was repaid
  • for more detail, you can select a link from these items to a breakdown showing more detail about it

You can’t appeal against an interest charge. If you don’t agree with the amount charged, write to the issuing office explaining why.

Published 12 September 2014