Work out your take-home pay
Income tax, National Insurance and net pay for any UK salary, 2026-27.
An employer who pays HMRC electronically must clear its PAYE bill by the 22nd of the month, while a cheque sent by post has to arrive by the 19th [1]. Miss those dates repeatedly and the penalty climbs from 1% of the unpaid amount up to 4% once there have been ten or more late payments in a tax year, with further 5% charges after six and twelve months [2]. Paying PAYE correctly is therefore less about the arithmetic and more about the calendar.
Every employer that runs payroll has to pay over the tax and National Insurance it deducts, and the amount is not just the Income Tax taken from wages. It bundles together several separate deductions, each reported through Real Time Information before the money is due.
This guide sets out what a PAYE bill is made up of, when it has to be paid, how to pay it, how to bring the figure down legitimately, and what happens if a payment is late. It is written for employers running their own payroll and for anyone taking on staff for the first time.
Key takeaways
- The electronic payment deadline is the 22nd of the month; the postal cheque deadline is the 19th.
- A PAYE bill combines Income Tax, employee and employer National Insurance, student loan deductions, the Apprenticeship Levy and any CIS deductions.
- Employers with an average monthly liability under £1,500 can apply to pay quarterly instead of monthly.
- Payments use the 13-character Accounts Office reference, not the Employer PAYE reference.
- Late payment penalties run from 1% to 4%, with extra 5% charges after six and twelve months.
What a PAYE bill is made up of
The amount an employer pays HMRC each period is the sum of several deductions collected through payroll, not a single tax. It brings together what has been taken from employees and what the employer owes in its own right [3]. Understanding the components matters, because each one is reported separately on the Full Payment Submission and each can be affected by a different adjustment.
The table below lists what typically makes up an employer's monthly PAYE liability.
| Component | Who it comes from |
|---|---|
| Income Tax deducted under PAYE | Employees' pay |
| Employee National Insurance (primary Class 1) | Employees' pay |
| Employer National Insurance (secondary Class 1) | The employer |
| Student and postgraduate loan deductions | Employees' pay |
| Apprenticeship Levy, where due | The employer |
| CIS deductions, for contractors in construction | Subcontractors' payments |
Income Tax and National Insurance usually make up the bulk of the bill. Employer secondary Class 1 National Insurance is charged at 15% on earnings above the Secondary Threshold of £5,000 a year in the 2026-27 tax year, and this is the part of the bill the employer funds itself rather than deducts [4]. Employee Income Tax is deducted at the individual's tax-code rate, from 20% at the basic rate upward [5].
Deductions that pass straight through
Some elements of the bill are money the employer has withheld on HMRC's behalf and is simply passing on. Student and postgraduate loan repayments are deducted from employees earning above the relevant plan threshold and remitted with the rest of the PAYE bill [6]. They are not an employer cost; the employer is a collection agent.
The Apprenticeship Levy applies only to employers with an annual pay bill above £3 million, charged at 0.5% of the pay bill after a £15,000 annual allowance, and it is reported through the Employer Payment Summary every month even when nothing is due [7]. Employers in construction operating the Construction Industry Scheme also pay over CIS deductions withheld from subcontractors as part of the same payment. Getting these components calculated and reported accurately is the job of an HMRC-recognised payroll platform, which files the underlying submissions before the payment falls due.
When to pay
PAYE is paid in arrears, one tax month behind the payroll it relates to. Tax months run from the 6th of one calendar month to the 5th of the next, so pay processed between 6 April and 5 May sits in month one and is due to HMRC shortly after [1]. The exact deadline depends on how the employer pays.
The two dates that matter are fixed and easy to remember, and they differ by payment channel.
| Payment channel | Deadline each tax month |
|---|---|
| Electronic (bank transfer, Direct Debit, card) | 22nd of the month |
| Cheque sent by post | 19th of the month |
Crucially, the money must reach HMRC by the deadline, not merely leave the employer's bank on that day [1]. If the 22nd falls on a weekend or bank holiday, the cleared payment has to arrive on the last working day before it, unless a Faster Payment is used, which can clear the same day [8].
Monthly payments
Most employers pay monthly. The liability built up across a tax month is reported on Full Payment Submissions on or before each payday, and the total is then paid over by the 22nd of the following month electronically [3]. Because the Real Time Information reports already tell HMRC what is owed, the payment simply settles a figure HMRC can already see [9].
Reporting on time and paying on time are two separate obligations. An employer can file every submission punctually and still incur a late-payment penalty by paying after the 22nd, because the penalty regime looks at when the money arrives, not when the report was filed [2]. This is why SME payroll software that surfaces the amount due against each deadline is worth more than one that only files the return.
Quarterly payments for smaller employers
An employer whose average monthly PAYE and National Insurance liability is less than £1,500 can pay quarterly rather than monthly [1]. The four quarters end on 5 July, 5 October, 5 January and 5 April, with electronic payment due by the 22nd of the following month, so 22 July, 22 October, 22 January and 22 April.
Quarterly payment does not change the reporting cadence. A quarterly payer still submits a Full Payment Submission on or before every payday; only the payment is consolidated into three-monthly instalments [9]. For a very small employer, or an accountancy practice handling many small schemes, this reduces the number of payment runs without touching the Real Time Information obligations, and payroll bureau software can track both cadences across a client base.
How to pay
HMRC accepts several payment methods, and they differ mainly in how long they take to clear. The employer chooses based on how close it is to the deadline. The most common routes are a bank transfer using Faster Payments, a Direct Debit, or a debit or corporate credit card online [8].
The table below summarises the main methods and their typical timing.
| Method | Typical clearing time |
|---|---|
| Faster Payments bank transfer | Same or next day |
| CHAPS | Same working day |
| Bacs | Three working days |
| Direct Debit (single or automatic) | Set up at least a few working days ahead |
| Debit or corporate credit card online | Same or next day |
A first-time Direct Debit needs to be set up several working days before the due date, after which HMRC collects the amount shown on the return automatically and tells the employer the date and figure in advance [10]. Personal credit cards are not accepted, and card payments by business debit or corporate credit card clear quickly but may carry a non-refundable fee for corporate cards [11].
The Accounts Office reference
Every PAYE payment must quote the correct reference, and this is where employers most often trip up. The payment reference is the 13-character Accounts Office reference, in a format such as 123PX00123456, not the Employer PAYE reference used for reporting [8]. The Accounts Office reference appears on the letter HMRC sends when the PAYE scheme is registered and on subsequent PAYE correspondence.
Using the right reference is what lets HMRC match a payment to the scheme and the period. For a one-off early or late payment that falls outside the normal monthly pattern, four extra digits are added to the reference to identify the specific tax year and month, so the money is allocated to the right period rather than the current one [8]. An employer that needs occasional one-off pay runs alongside its scheme can produce compliant documents with an instant payslip generator, but the PAYE payment itself always carries the Accounts Office reference.
Reducing what you owe
The headline PAYE figure is not always the amount an employer actually pays. Two legitimate mechanisms reduce it: the Employment Allowance and the recovery of statutory payments, both claimed through the Employer Payment Summary [12]. An employer that is entitled to either and does not claim it simply overpays.
Employment Allowance
Eligible employers can claim the Employment Allowance, which reduces their annual employer secondary Class 1 National Insurance bill by up to £10,500 in the 2026-27 tax year [13]. The allowance is applied against employer National Insurance month by month until the £10,500 limit is used up, and it is taken off before any other adjustment such as recoverable statutory pay [14].
The allowance is claimed through the Employer Payment Summary, and once claimed it carries forward within the tax year, so an employer does not re-submit it every month [14]. Not every employer qualifies, and the claim reduces employer National Insurance specifically, not the Income Tax or employee National Insurance elements of the bill [13].
Reclaiming statutory payments
Employers can recover most of the statutory family-related payments they make. An employer can usually reclaim 92% of Statutory Maternity Pay and the other statutory parental payments, rising to 109% under Small Employers' Relief where the previous year's Class 1 National Insurance was £45,000 or less [15]. The recovery is claimed by including the amounts on the Employer Payment Summary [12].
Timing matters here. To have a reduction applied against what is owed from the Full Payment Submission, the Employer Payment Summary has to reach HMRC by the 19th of the following tax month [12]. Statutory Sick Pay is the exception: it is not recoverable, so the employer bears its full cost [15]. Handling these offsets correctly each month is one of the clearest arguments for payroll built around Real Time Information rather than a manual calculation.
Work out the employer cost of a hire
Before taking on staff, an employer can size the full PAYE and National Insurance cost with the Moonworkers UK salary calculator, which applies the 2026-27 rules to any gross salary and shows the employer National Insurance that will feed into the monthly PAYE bill.
£ per month
e.g. 1257L, S1257L, BR, D0
S = Scotland · C = Wales · W1/M1 = non-cumulative
Enter a salary or hourly rate above
About this calculator
This calculator gives you a close estimate of your UK payroll deductions for 2026-27, using HMRC's exact percentage method with periodised thresholds. It handles the three tax territories, K codes with the 50% regulatory limit and its carry-forward, weeks 53, 54 and 56, the cumulative and W1/M1/X bases, student and postgraduate loans, and pension contributions on qualifying earnings. It still won't match your payslip to the penny in every case: it does not cover in-year tax code changes, payrolled benefits in kind, NI deferral across more than one employment, directors on the annual earnings period, or employer-level annual adjustments such as the Employment Allowance and the apprenticeship levy. Powered by the same engine as the Moonworkers Payroll API.
Frequently asked questions
Why might the result differ from my payslip?
This calculator uses your current gross pay and tax code to produce an estimate. K-code carry-forwards and weeks 53, 54 and 56 are handled, and the Year-to-date section reproduces a specific period exactly. What your employer may apply that this does not: a mid-year tax code change, benefits in kind processed through payroll, or NI deferral across more than one employment. For most employees on a standard tax code the difference is negligible.
What tax code should I enter?
Use the tax code shown on your most recent payslip or the PAYE Coding Notice (P2) from HMRC. If you're not sure, 1257L is the standard code for most employees resident in England, Wales, or Northern Ireland. Use S1257L for Scotland or C1257L for Wales if you pay Scottish or Welsh income tax.
Which NI category applies to me?
Most employees use Category A. Use M if you are under 21, H if you are an apprentice under 25, or C if you are over State Pension age. Your employer is responsible for assigning the correct category — if in doubt, check your payslip.
Which student loan plan am I on?
Your plan depends on when and where you studied. Plan 1 covers students who started before September 2012. Plan 2 is for English and Welsh students who started from September 2012 to July 2023. Plan 5 applies to English students who started from August 2023. Plan 4 covers Scottish students. You can check your plan at gov.uk or on your payslip.
What is the YTD cumulative PAYE mode?
HMRC's standard method calculates income tax on your total earnings to date each period, then subtracts tax already paid. If you're mid-year and want to see exactly what tax should be deducted in a specific period, expand the Year-to-date section and enter your running totals from previous periods only.
Conclusion
Paying PAYE is a monthly discipline rather than a difficult calculation. The figure is assembled from tax, National Insurance, loan deductions and any levy or scheme charges, reported through Real Time Information, and then paid over by the 22nd electronically or the 19th by cheque. The reference on the payment has to be the Accounts Office reference, and the amount can be brought down by the Employment Allowance and by reclaiming statutory pay through the Employer Payment Summary.
The employers who avoid penalties are the ones who treat the payment deadline as seriously as the reporting deadline, because the two are policed separately. As HMRC continues to tighten the link between real-time reporting and prompt payment, keeping both in step, ideally through a system that shows what is owed against each date, is the surest way to stay clear of interest and penalties.
Frequently asked questions
What is the difference between the Employer PAYE reference and the Accounts Office reference?
They are two different numbers with two different jobs. The Employer PAYE reference identifies the payroll scheme and is used for reporting, such as on Full Payment Submissions, P60s and P45s. The Accounts Office reference is a 13-character number, in a format like 123PX00123456, used only when paying the PAYE bill. Quoting the wrong one can cause a payment to be misallocated.
Can an employer pay PAYE quarterly instead of monthly?
Yes, if the average monthly PAYE and National Insurance liability is less than £1,500. The employer still files a Full Payment Submission on or before every payday, but pays the accumulated total once a quarter. The four quarters end on 5 July, 5 October, 5 January and 5 April, with electronic payment due by the 22nd of the following month.
What happens if an employer pays PAYE late?
HMRC charges a late-payment penalty that rises with the number of late payments in a tax year, from 1% of the unpaid amount up to 4% once there have been ten or more. Amounts still unpaid after six months attract a further 5% penalty, and another 5% after twelve months. HMRC also charges interest on any PAYE paid after the due date, on top of the penalty.
Does filing Real Time Information on time also pay the PAYE bill?
No. Reporting and paying are separate obligations. Submitting the Full Payment Submission tells HMRC what is owed, but the money still has to be paid by the deadline through a separate payment. An employer can file every return on time and still incur a late-payment penalty by paying after the 22nd, because the penalty depends on when the payment arrives.
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Documentary-style wide shot, a UK small-business owner at a kitchen-table home office reviewing a bank transfer on a laptop with a printed HMRC letter beside it, soft morning daylight from a window on the left, muted palette of warm grey, navy and paper white, a mug and a notebook on the table, off-centre composition with the subject in the right third, shot on a Leica Q3 at 28mm f/2.8, photojournalism, subtle 35mm film grain, no AI artefacts, no warped hands, no warped text, landscape orientation 16:9.
