There’s a new PAYE Direct Debit scheme being launched on 3rd October 2022. So finally, there will be an easy way to pay PAYE/NIC to HMRC. No more hunting around for the monthly PAYE bill and payment reference. Just set up the PAYE direct debit, then let your payroll software and HMRC do the rest. Plus, you get a few more days to pay it and there should be no interest charged. Read on below for how to set up the new Direct Debit.

Isn’t there already a Direct Debit for PAYE?

There is already a direct debit for PAYE but you can only set it up for a single payment, and you have to enter the amount and the payments reference. So it’s pretty useless! We’ve been submitting payroll online for nearly 10 years now, so it’s about time HMRC improved this facility. Finally the new direct debit for PAYE is almost here.

How much will be included in the New Direct Debit

Once you’ve set up the new direct debit, HMRC will collect amounts based on the following reports submitted to them:

• Full Payment Submission (that’s the PAYE/NIC due for each month)
• Employer Payment Summary (any adjustments such as maternity pay)
• Construction Industry Scheme (if you’ve included this on your payroll)
• Apprenticeship Levy
• Class 1A National Insurance (on benefits in kind)
• Earlier Year Update

If there is a credit on your PAYE account, allocated to the most recent month, it will reduce the amount payable via direct debit.

Three days before the direct debit is due, HMRC will send a notification of the amount it will take.

When will the Direct Debit for PAYE be taken?

Usually the PAYE/NIC owed for a tax month (ending on the 5th every month) is due by the 22nd of the same month. Or the nearest working day before the 22nd if the 22nd isn’t a working day. If you pay by cheque, make that the 19th. However, the new direct debit for PAYE will be taken on the 23rd, or later if the 23rd isn’t a working day. No interest will be charged if the direct debit is successfully taken first time.

How to Set up a New PAYE Direct Debit

There are a couple of things to know before you set up a new PAYE direct debit.

• Only a bank account signatory can set up a direct debit. So agents and employees won’t be able to do this.
• You will need an HMRC account and you need to have added the PAYE service to that account.

So if all of the above is ok, here is what you need to do to set up a new direct debit:

Method A

1. Log into your HMRC Account
2. Go to your PAYE Service
3. Click Set up a Direct Debit
4. Follow the HMRC instructions

Method B

1. Go to the general Pay Employers’ PAYE page
2. Click on Direct Debit
3. Follow the HMRC instructions
4. Log into your HMRC account when instructed.

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Are you paying casual workers this summer? Perhaps you are paying piece-rates for the amount of produce picked or packed by each person. Reporting such small and variable payments under the new RTI system is a significant hassle.

The RTI rules require you to report each payment to workers, including paying casual workers, on or before the date of the payment. Fortunately you may be able to use one of these two concessions to ease your RTI reporting burden:

a) Where you are  paying casual workers daily or more than once a week, but the amounts paid are less than £109 per person per week, you can send RTI reports to HMRC weekly; or

b) Where the total number of your employees, including casual workers, is less than 50, you can send your RTI reports to HMRC on a monthly basis.

Concession b) will only apply for payments to employees made before 6 April 2014.

Your casual workers are likely to have no set working hours for each week. In effect they will be on a zero hours contract; paid for the hours they work, but otherwise not at all. In such cases you should choose option D of hours worked on the FPS report under RTI.

The Government wants employers to report data on the hours worked by employees in order to prevent fraud in the Tax Credits system. Under Universal Credit the hours worked will not be relevant to the employee’s claim, so in time when all claimants are moved from Tax Credits to Universal Credit, the requirement to report hours worked should be dropped.

We can do your payroll for you so you can let us worry about when to submit RTI reports when paying casual workers. Get an instant quote for our payroll services using the button below.

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