New employers PAYE by Direct Debit plan

New employers PAYE by Direct Debit plan

Employers using PAYE can take advantage of a new variable Direct Debit payment plan from September 2022.

At the moment, there’s a need to set up Direct Debits every month, which can be a real chore. But after receiving feedback, HMRC has listened to requests to set up a new service. This service can be accessed through Pay employers’ PAYE or by using the business tax account and the employers PAYE service.

A new ‘set up a Direct Debit’ link is being introduced from 19 September allowing customers to pay Employers PAYE by Direct Debit. HMRC is then authorised to collect directly from their bank account based on return submissions.

Using the link ‘Manage you Direct Debit’ employers will be able to view, change or cancel the Direct Debit online.

Only employers are able to do this, your accountant is not able to view, create, amend or cancel Direct Debits.

When signed up to the variable payment plan to pay Employers PAYE by Direct Debit, HMRC will be able to collect the following on receipt of the returns:

  • Employer Payment Summary
  • Full Payment Submission
  • Apprenticeship Levy
  • Construction Industry Secheme
  • Earlier Year Update
  • Class 1A National Insurance

Setting up Employers PAYE

When setting up your employers PAYE by Direct Debit, you’ll need your 13-character accounts office reference number.

If you’re unsure about your number, you can find it on the letter HMRC sent you when you first registered as an employer. It’s also on the front of your payment booklet or HMRC’s letter that replaced it.

You’ll need to add 4 additional numbers to the end of the 13-character reference number each time you may an early or late payment. If using this service, the numbers are worked out for you. Click here to sign in to your tax account.

How long does it take to pay by Direct Debit?

Allowing 5 working days for the Direct Debit to process the first time you set it up is advisable. So make sure you have everything in place on time. Once in place, it should take 3 working days if you’re using the same bank details.

Payments show on your bank statement as ‘HMRC NDDS’. Your PAYE bill must be paid by:

  • 22nd of the next tax month if paying monthly
  • 22nd after the end of the quarter if you pay quarterly

If paying by cheque through the post, it must reach HMRC by the 19th of the month.

No payments due

If you have not paid any employees for at least one tax month, you must tell HMRC. You can do this by filling in an Employer Payment Summary (EPS). This must be sent by the 19th of the month following the tax month when no employees were paid.

Failing to send an EPS could lead to HMRC issuing a notice estimating how much you owe. You may also have to pay a penalty.

If you want your PAYE looking after, you can chat to one of our team today.