Ever heard someone complain about payments to HMRC?

Who hasn’t!

With employment, you needn’t get caught out if you know what will go on top of your payment to employees.

You can even buget for it if you know what your payments to employees will be!

So let’s discuss what the payment to HMRC can include, when you’ve got to pay it and how to pay it.

Let’s get started...

PAYE & Employee NIC’s

PAYE & NIC’s will be deducted from the salaries process through the payroll.

Employees will take home their payments ‘NET’ after these deductions.

PAYE

The Basic rate is charged at 20% for monthly earnings between £1,048 and £3,142, Higher rate between £3,142 to £10,428 and 45% for anything above £10,428.

(x these amounts by 12 to find the annual thresholds)

NIC’s

The first annual threshold for employee NIC’s is now £12,570 (the same as PAYE), where your employee will pay 8% between £1,048-£4,189 per month, then 2% for anything over £4,189 per month (£50,268 per year).

The amounts will vary depending on their payroll and other deductions or additions they have added to the pay run.

So this is part one of what your payment will be made up of to HMRC.

EMPLOYERS NIC’s

The next part of your payment to HMRC will usually include Employers Class 1 NIC’s.

For 2024/25, these come into effect on any employee paid over £9,096 per year (or £758.00 per month).

The amount employers will pay on salaried amounts over over £758.00 per month is 13.8%.

Examples:

• You pay an employee a consistent £500 per month.

The monthly Employers NIC charge is £0.

• You pay an employee a consistent £1,000 per month.

The monthly Employer NIC charge will be (£1,000-£758) x 13.8% = £33.40. £400.75 for the year.

If you claim employment allowance, you will get up to £5,000 removed from this charge every tax year.

Any balance payable will be included in your payment to HMRC.

STUDENT LOANS

If your employee has had a student loan, they will repay it out of their salary if they go over the threshold. The threshold and % depends on the loan plan they were on when they were a student.

9% will be payable on the following loan plans over these monthly thresholds:

• £2,082 for Plan 1
• £2,274 for Plan 2
• £2,616 Plan 4
• £2,083 Plan 5

Or a 6% repayment on a Master’s or Doctoral Loan if they earn over £1,750.

This will be included in the payment you need to make to HMRC.

CIS DEDUCTIONS

f you hire subcontractors in the Construction Industry, although these are not your employees, you may still have to make payments from their deductions and pay HMRC in your PAYE bill.

The Construction Industry Scheme (CIS) deduction rates are:

• 20% for registered subcontractors
• 30% for unregistered subcontractors
• 0% if the subcontractor has ‘gross payment’ status.

You have to pay these deductions to HMRC and they count as advance payments towards the subcontractor’s tax and National Insurance bill.

WHEN & HOW TO PAY

WHEN

You have to make payents on the 22nd of the next tax month if you pay monthly.

Or, the 22nd after the end of the quarter if you pay quarterly.

HOW

You need to use your unique Accounts Office Reference number (AORN) as the payment reference.

Example: 123PA12345678.

You can pay online or by Direct Debit.

HMRC bank payments to:

• sort code - 08 32 10
• account number - 12001039
• account name - HMRC Cumbernauld

LATE PAYMENTS

There are penalties for payments not made in full or on time to HMRC.

The first failure to pay doesn‘t count as a default. Further payments either late or not made in full are charged:

1 to 3 @ 1%

4 to 6 @ 2%

7 to 9 @ 3%

10 or more @ 4%

Daily interest will also be added to the amounts you owe. until fully paid.

A further 5% will be charged if it is still outstanding after 6 months and 5% again at 12 months.

So it‘s important to budget this right.

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