RTI Penalties

Posted by tinamitchell - July 23, 2018 4:14 pm RTI Penalties

In June 2018, HMRC announced that there would be no penalty charges for a late filed Full Payment Submission (FPS) so long as it was filed within 3 days of the “payment date”.

However, it should be noted that employers who are persistently late filing their FPS, but do so within the 3 days of the “payment date”, may soon risk incurring a penalty as from 5 April 2019, HMRC propose to bring in automatic late filing penalties for late filing of in year returns (FPS and Employer Payment Summary (EPS).

These changes propose that:

  • there will be no late filing fee for the first missed deadline (unless the scheme is for an annual payroll);
  • penalties will be issued every quarter;
  • new employers will not receive a penalty so long as they submit their first FPS with 30 days of the payment date.

Cost of penalties

How much the penalty is will depend on the size of the payroll.  Penalties are as follows:

1 to 9 employees                       £100

10 to 49 employees                   £200

50 to 249 employee                   £300

250 or more employees             £400

It should also be noted that if you are more than 3 months late, you may also be charged an additional penalty of 5% of the tax and National Insurance reported.  Thereafter, if you pay the penalty within 30 days, there will not be any interest, however, for penalties not paid within 30 days, interest will accrue.

Late payment of Tax and National Insurance

Automatic penalties will be sent to employers who pay their PAYE and NIC late in the year.  These will be issued on a quarterly basis and the penalty amount will be based on the amount of PAYE and NIC that is late. The first default of payment will not receive a penalty but will, however, be recorded on the employer account.

The penalty percentages applied are as follows:

No. of defaults in the year        Penalty % applied

1 to 3                                                                   1%

4 to 6                                                                  2%

7 to 9                                                                   3%

10 or more                                                         4%

Interest will accrue daily on all amounts unpaid from the due date of any PAYE, NIC and penalties due.

If, after 6 months, the employer has still not made a payment in full, they may also be charged an additional penalty of 5% of the amounts unpaid and a further 5% penalty if it is still not paid after 12 months.

If you think that you may struggle to meet deadlines for payments to HMRC, you should contact them direct to arrange a payment plan to ensure interest and penalties are kept to a minimum.

Need some help?

If the introduction of RTI and the pending changes due to Making Tax Digital (MTD) are starting to exhaust your payroll capabilities then please do contact a member of our payroll teams at your local MFW office.  Our payroll service is designed to be flexible so you can choose to use as much or as little of our service as you need and can instruct us on an ad-hoc basis, when you might need extra support, or as a regular service.