Paying PAYE Tax to HMRC: A Guide for Employers

Every UK employer that runs payroll must pay its PAYE bill to HMRC by the 22nd of the following tax month when paying electronically, or by the 19th when paying by post ^[1]. Pay late and interest accrues daily at the Bank of England base rate plus four percentage points, a rate that stood at 7.75% from 9 January 2026 ^[2].

The payment itself is the final step of a payroll cycle that begins with a Full Payment Submission under Real Time Information. What the business actually owes is not a single tax but a bundle of amounts collected and generated during the pay period, and paying the right figure to the right reference by the right date is where many employers slip.

This guide explains what the PAYE bill is made of, when it falls due, how to pay it, which reference to quote so the money lands in the correct account, and what it costs to be late. It is written for employers running their own payroll and for the accountants and bureaux who manage it on their behalf.

Key takeaways

• The PAYE bill bundles employee income tax, National Insurance, student loan deductions, CIS deductions and the Apprenticeship Levy, less any statutory pay reclaimed.
• Electronic payment is due by the 22nd of the following tax month, and postal payment by the 19th.
• Employers with an average monthly PAYE bill below £1,500 can arrange to pay quarterly instead of monthly.
• The payment reference is the 13-character Accounts Office reference, extended to 17 characters when paying for anything other than the current period.
• Late payment triggers daily interest at base rate plus four percentage points, with escalating penalties for repeated defaults in the same tax year.

What the PAYE bill is made up of

The amount an employer sends to HMRC each period is the total of several distinct sums that arise from running payroll. Treating it as one undifferentiated tax bill is the first mistake, because each component has its own rules and its own reporting route.

Deductions collected from employees

The largest part of most bills is money the employer has already withheld from employees and now passes on. This includes Pay As You Earn income tax deducted under each employee's tax code, and the employee's Class 1 National Insurance contributions ^[3]. Student loan and postgraduate loan repayments collected through payroll are added to the same bill and forwarded to HMRC ^[3].

These deductions never belonged to the business. The employer holds them briefly between pay day and the HMRC payment deadline, which is why late payment is treated seriously: the money is, in effect, already the employee's contribution to the public purse ^[4]. Recording each deduction accurately is a core function of any UK payroll software, which totals them automatically from the payrun ^[3].

Employer contributions and levies

On top of the amounts withheld, the employer owes its own liabilities. Employer Class 1 National Insurance is charged at 15% on earnings above the Secondary Threshold of £5,000 a year for the 2026-27 tax year ^[5]. Class 1A and Class 1B National Insurance on certain benefits, termination awards and sporting testimonials also form part of the PAYE bill where they apply ^[4].

Larger employers add the Apprenticeship Levy, charged at 0.5% of the annual pay bill for businesses whose pay bill exceeds £3,000,000, and collected through the same PAYE process ^[6]. Where a business operates in construction, Construction Industry Scheme deductions made from subcontractors also feed into the monthly figure ^[3].

The employer National Insurance element is the component that has grown most sharply, having risen to 15% while the Secondary Threshold fell to £5,000, and it is worth understanding how employer National Insurance is calculated before checking the monthly bill ^[5]. For most businesses the employer contributions and the amounts withheld from staff together account for almost the whole payment, with levies and CIS relevant only to specific sectors ^[4].

What reduces the bill

The bill is not only additions. Employers can offset statutory payments they have made, such as maternity, paternity, adoption, shared parental, parental bereavement and neonatal care pay, by reclaiming them through an Employer Payment Summary before the 19th of the following month ^[3]. Small employers can recover 109% of family-related statutory pay under Small Employers' Relief, and the recovered amount is netted off what is owed ^[4].

Employers eligible for the Employment Allowance also reduce their employer National Insurance liability through it, lowering the amount payable each period until the allowance is used up ^[5]. Accountants managing this across a portfolio typically rely on payroll bureau software that applies each client's reliefs before producing the payment figure ^[3].

When PAYE must be paid

The deadline turns on how the employer chooses to pay and, for smaller businesses, on whether they qualify to pay less frequently. Missing the date is what starts the interest clock, so the calendar matters as much as the calculation.

Monthly payments and the tax month

The PAYE tax month runs from the 6th of one calendar month to the 5th of the next ^[3]. For an employer paying electronically, the bill for that tax month is due by the 22nd of the following month, and a postal payment by cheque must reach HMRC by the 19th ^[1]. Where the 22nd falls on a weekend or bank holiday, the payment must clear by the last working day before it ^[1].

The table below sets out how the timing works for a single tax month.

Quarterly payments for smaller employers

An employer whose average monthly PAYE bill is less than £1,500 can arrange to pay HMRC quarterly rather than monthly ^[1]. The quarters follow the tax year, so a payment for the 6 April to 5 July period is due by 22 July for electronic payment ^[3].

Quarterly payment eases cash flow for very small businesses, but the reporting obligation does not change: a Full Payment Submission is still required on or before every pay day, even though the money is paid over less often ^[3]. Sole traders and single-director companies running occasional payroll should confirm the arrangement with HMRC rather than assume it applies automatically ^[1].

The £1,500 threshold is measured on the average monthly liability across the year, so a business that grows past it mid-year should switch to monthly payment to avoid falling out of the arrangement without noticing ^[3]. An employer that produces one-off or instant payslips for occasional workers still reports and pays through the same PAYE framework, even when a payrun happens only a few times a year ^[1].

How to pay HMRC

HMRC accepts several payment methods, and they clear at different speeds. The practical rule is to choose the method by how close the payment is to the deadline, because a method that takes three working days is useless on the 21st.

Same or next day methods

The fastest routes clear on the same day or the next working day. Faster Payments through online or telephone banking, CHAPS, and payment by debit card or corporate credit card typically reach HMRC the same or the following day ^[7]. These are the methods to use when the deadline is close.

An employer paying by bank transfer needs HMRC's sort code, account number and account name, together with the correct payment reference ^[7]. Businesses that embed payroll into their own platforms often trigger these figures automatically through an HMRC-recognised payroll API, which produces the exact amount due and the reference for each period ^[3].

Slower methods to plan around

Some methods need lead time. Bacs, an existing Direct Debit and a posted cheque each take around three working days to clear, so they must be started well before the 22nd ^[7]. Setting up a Direct Debit for the first time takes longer still, around five working days, because the mandate must be processed before the first collection ^[7].

A recurring Direct Debit is the method least likely to result in a missed deadline, because HMRC collects the amount automatically once the variable payment plan is authorised ^[1]. For employers who have been caught out by clearing times, moving to Direct Debit removes the timing risk from the process ^[7].

The payment reference that gets money to the right place

Paying the right amount to the wrong reference is the same as not paying at all, because HMRC cannot match the money to the employer's account. The reference to quote is the Accounts Office reference, a 13-character code issued when the business first registered as an employer and shown on the letter HMRC sent at that point ^[1].

When paying on time for the current period, the 13-character reference alone is enough ^[7]. When paying for a different period, for example an earlier month or a quarterly total, the employer must add four more characters to the end, two for the tax year and two for the tax month or quarter, giving a 17-character reference entered without spaces ^[7]. Quoting the wrong period reference is a common cause of payments being misallocated and interest being charged in error ^[4].

What happens when payment is late

Late payment carries two separate costs: interest that accrues from the moment the deadline passes, and penalties that escalate with the number of times an employer pays late in a tax year. They are charged independently, so a persistent late payer can face both.

Daily interest

HMRC charges interest on any PAYE paid after the due date, running daily from the day after the deadline until the balance clears ^[2]. The rate is set at the Bank of England base rate plus four percentage points, and it stood at 7.75% from 9 January 2026 ^[2].

Because interest is calculated daily, even a payment that is a few days late attracts a charge, and the amount grows the longer the balance is outstanding ^[2]. Interest is not discretionary, so it applies regardless of the reason for the delay ^[3].

Late payment penalties

Separately, HMRC operates a default-based penalty regime for PAYE paid late. The first late payment in a tax year is generally not counted as a default, but each subsequent late payment builds towards a penalty whose percentage rises with the number of defaults ^[3]. The penalty is charged on the amount paid late.

Amounts still unpaid after six months attract a further penalty, with another added after twelve months, on top of the daily interest already running ^[3]. An employer that cannot pay on time should contact HMRC before the deadline to arrange a Time to Pay agreement rather than simply missing the date ^[1].

Work out the PAYE and NI that make up the bill

Because the bill is driven by the tax and National Insurance calculated for each employee, an employer preparing to pay can check the figures with the Moonworkers UK salary calculator, which applies the current PAYE and National Insurance rules to any gross salary and shows the deductions that feed the monthly total.

Conclusion

Paying PAYE to HMRC looks like a simple transfer, but the sum being paid is the output of an entire payroll cycle: deductions held on behalf of employees, the employer's own National Insurance and levies, and any statutory pay reclaimed. Getting the figure right depends on the payrun behind it, and getting the payment right depends on the deadline, the method's clearing time and the reference quoted.

The employers who never think about interest or penalties are usually those who have removed the timing risk entirely, whether by paying by recurring Direct Debit or by automating the calculation and the reference through their payroll system. As HMRC continues to charge interest at base rate plus four percentage points, the cost of a missed deadline is no longer trivial, and a reliable payment routine is the cheapest form of compliance a business can adopt.

Frequently asked questions

When is the PAYE payment deadline each month?

Electronic payments must clear by the 22nd of the tax month following the one being paid for, while postal payments by cheque must reach HMRC by the 19th ^[1]. Where the 22nd is a weekend or bank holiday, the money must clear by the last working day beforehand ^[3].

Can a small business pay PAYE quarterly instead of monthly?

Yes. An employer whose average monthly PAYE bill is below £1,500 can arrange to pay quarterly, with the payment for each quarter due by the 22nd after the quarter ends for electronic payment ^[1]. The Full Payment Submission is still required on or before every pay day regardless of how often the money is paid ^[3].

What reference do I use to pay HMRC PAYE?

Use the 13-character Accounts Office reference issued when the business registered as an employer ^[1]. When paying for a period other than the current one, add four characters for the tax year and month or quarter, making a 17-character reference entered with no spaces ^[7].

What does it cost to pay PAYE late?

HMRC charges daily interest at the Bank of England base rate plus four percentage points, which stood at 7.75% from 9 January 2026 ^[2]. Repeated late payments in the same tax year also attract penalties rising from 1% to 4% of the amount paid late, depending on the number of defaults ^[3].