A New Way to Pay Payroll Taxes

HMRC has just launched its ‘variable payment plan’ for employers. What is it and should you consider signing up for it?

On 19th September, HMRC launched a voluntary service for employers that allows HMRC to collect variable payroll taxes by direct debit (DD)

Any tax you report to HMRC online as part of your payroll process will be included. So as well as PAYE tax and NI contributions, they can also take Class 1A payments due on benefits in kind, construction industry scheme deductions and the apprenticeship levy.

The DD will be collected on all amounts that are reported on your payroll’s Full Payment Submission, each month, or in the case of the Class 1A NI contributions, the annual declaration of benefits in kind.

It will be collected on the 23rd of each month or the next working day, and HMRC have promised that the amounts collected will never exceed the amounts submitted on the payroll reports.

The advantages of joining this scheme would be to have one less payment to remember to make each month or quarter, thereby avoiding any late payment penalties and interest plus no more erroneous HMRC letters saying your payment is overdue when you know full well it isn’t. This has happened to many of our clients recently!

However, one concern that has been raised is whether HMRC will get the amount of the DD correct each time, but if you’re worried about this then you can check the amount of your DD 3 days before it’s taken, giving you enough time to sort out the issue with HMRC or to cancel the DD.

If you would like to join the new DD service then it can be accessed via this link,  Pay employers’ PAYE or directly through your business tax account and choosing the employers PAYE service.

HMRC have informed us that there will be changes to the business tax account and the employers’ liabilities and payments screens on the employers’ PAYE service. A new link ‘Set up a Direct Debit’ will be introduced and this will authorise HMRC to collect the PAYE/NI directly from your bank account based on the monthly FPS and EPS. Once you’ve set up the DD, the link will change to ‘Manage your Direct Debit’ and you will be able to view, change or cancel the DD online.