Payment will be automatically collected by HMRC once payroll data is submitted to them. We expect the service to launch on 3 October 2022.
PAYE is the system used in the UK to withhold income tax and national insurance contributions from employees' wages. The new service will make it easier for taxpayers to pay their bills on time, without having to worry about missed payments or late fees.
To set up a PAYE direct debit, taxpayers will need to provide their bank account details and PAYE reference number to HMRC. They can do this online once the service has launched.
Here are some important questions about the new Direct Debit service:
What amounts will HMRC collect?
HMRC will collect the amount declared on the payroll submission. The amount collected will never be higher than this. It may be lower if previous overpayments have been allocated to that period.
When will HMRC collect payment?
Funds will be drawn on the 23rd of each month (or the next working day) after the usual payday. For most clients, this will normally be the 23rd of the month after payroll - e.g. payroll paid to employees on Fri 30 September 2022 should be collected by HMRC on Monday 24 October 2022.
If you are unsure, the collection date should always be near the payment deadline we communicate to clients (normally around the 22nd of the month).
Taxpayers will receive advance notice three days before every collection, including the amount. Although this falls after the payment deadline, as with VAT there will be no interest charged as long as the collection is made successfully.
Will you track Direct Debit payments for me?
We regularly review client PAYE accounts to ensure payments are being received by HMRC.
However, we will not track which clients are using variable direct debit. Our payroll reports will continue to advise clients to make payments as normal, with an added caveat that if they have created a variable Direct Debit, they should not make a manual payment in addition.
How do I sign up?
Unfortunately, this must be done by the taxpayer. As your agent, we cannot create a Direct Debit on your behalf.
We are waiting for detailed guidance, but the Direct Debit will be created in the taxpayer's PAYE Online service. This means taxpayers will need to have access to HMRC Online and have registered their PAYE account via this service, to take advantage of this payment method.
Does this apply to the Construction Industry Scheme?
Yes. Payments submitted via CIS can also be collected in this way.
If you have any further queries or would like help in setting up a variable PAYE direct debit, please do not hesitate to reach out to your regular contact, or contact us directly via hello@bergandwilliams.com.
We would like to remind our clients that PAYE and CIS deadlines remain the same, and it is important to make sure payments are received by the normal deadlines regardless of payment method. This is to avoid any interest or late payment penalties.
