New PAYE Direct Debit

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

Log into your HMRC Account
Go to your PAYE Service
Click Set up a Direct Debit
Follow the HMRC instructions

Method B

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

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