In the UK, payroll compliance is a matter of correctness. It is a fundamental and legal requirement that ensures the business remains transparent, the employees are paid accurately and promptly, and HMRC is satisfied with their tax dues.
This discussion guide has been published to make the timeliness and essential payroll deadlines of limited companies understandable and to demonstrate the penalties you may encounter if you miss them. Let’s start first with those dates and fines that will keep your company in line with the required HRMC regulations.
Critical Payroll Deadlines for Limited Companies
First, the only way to escape being penalised and maintain efficient payroll administration starts by being aware of the payroll due dates provided by HMRC. The due date for payroll is critical, and delays can cause serious problems, such as late payment penalties. Below is a complete list of the payroll periods you need to report to HMRC during the year:
1. Full Payment Submission (FPS) Deadline
An FPS should be submitted to HMRC every time you pay your employees. It demonstrates to the HMRC the salary of employees, income tax, National Insurance contributions, and other deductions taken from the employees as a percentage of their income.
Key Date: The FPS should be sent to HMRC on the day you pay your employees.
For example, if your employees are paid every last Friday of the month, your FPS needs to be transmitted to HMRC on that Friday, or even before, to avoid penalties for late remittance of reports.
2. Employer Payment Summary (EPS) Deadline
EPS is the short form of the Employer Payment Summary, a document you present to the HMRC if you need to deduct some money from your tax due to statutory payments such as sick pay or parental leave.
Besides, no EPS should be sent in if employees were unpaid during the stated month.
Critical Day: The EPS shall be adduced on the 19th day of the subsequent taxable month.
If one wants to reduce their April statutory maternity pay to HMRC, then May 19th is the final day to submit the EPS.
3. PAYE Settlement Payment
Employers are to receive PAYE (Pay As You Earn) contributions and NICs from employees and then pay the same to the HMRC on their behalf. This payment cannot be late, or else it can attract penalties and interest from the HMRC.
Crucial Key Date: The payee must receive the necessary information from HMRC by the 22nd (in the case of electronic payments) or 19th (when the cheque is used) of the subsequent month.
Similarly, the April PAYE that is due to payroll should reach the company by the 19th of May in the case of cheque payment or the 22nd of May for electronic transfers.
You can also read this article: Gift Aid donations reduce your tax bill – but don’t get caught out
4. Quarterly Payment Schedule for Small Employers
Smaller companies, in addition to the larger ones, that employ fewer than 250 workers can take advantage of paying their taxes quarterly. However, the quarterly payments have to be made on time to avoid fines, even though they happen less frequently.
Important Dates: The company is obliged to send its payment on the 19th of July, October, January, and April for the payment of liabilities owed in the previous quarters.
For instance, a check payment for PAYE in the first round of the year (April-June) should be made on July 19th, and an electronic payment should be made on July 22nd at the latest.
5. Annual Payroll Deadlines
Employers must submit their final payroll report and provide employees with their P60s at the end of each tax year.
Key Dates:
- The final FPS must be submitted by 5th April.
- P60s must be provided to employees by 31st May.
- P11D and P11D(b) (benefits and expenses forms) must be submitted by 6th July.
Penalties for Missing Payroll Deadlines
Failing to meet payroll deadlines can result in penalties from HMRC, which can quickly add up and create additional financial burdens for your limited company. Here are the main penalties to be aware of:
1. Late Submission Penalties
If you submit your FPS or EPS late, HMRC can impose a penalty based on the number of employees you have:
- 1 to 9 employees: £100 per late submission.
- 10 to 49 employees: £200 per late submission.
- 50 to 249 employees: £300 per late submission.
- 250 or more employees: £400 per late submission.
Example: A limited company with 12 employees that submits their FPS late three times in a tax year could face a penalty of £600 (£200 per late submission).
2. Interest on Late Payments
HMRC charges interest on late PAYE, NICs, or student loan deductions. The interest is calculated daily from the due date until the payment is made.
Example: If your PAYE payment of £5,000 for May is delayed by 10 days, HMRC will charge interest on the unpaid amount for each of those days.
3. Penalties for Inaccurate Returns
Incorrect payroll submissions could result in a range of penalties that HMRC will determine based on the level of inaccuracy. Where HMRC feels negligence is the cause of the mistake, the penalties usually range from 0% to 100% of the tax being owed, depending on the amount.
For example, if HMRC considers an error that causes a company to underrepresent NICs by £2,000 to be intentional, it might be required to pay a penalty of not more than £2,000.
You can also read this article: How to Manage Employee Benefits & Complete P11D Reporting
Staying Compliant: Tips for Limited Companies
If your payroll calendar is missing proper submission and payment dates, you can save yourself deep breaths and financial stress by doing the following:
- Remind yourself: Use payroll software or calendar reminders to make sure to complete all submissions and payment deadlines.
- Use an Intermediate: In-house payroll might be too time-consuming or even complex to spare time to handle, so consider an alternative option, such as a payroll provider or an accountant, to process it for you.
- Inform yourself: Read HMRC updates regularly to stay informed of changes to payroll regulations and timeframes.
- Software Efficiency: Filling out your taxes on paper is an outdated method that is open to errors, while automated payroll solutions can ease the process and ensure that you submit your returns on time.
Conclusion: Staying Ahead of Payroll Deadlines
Timekeeping to payrolls is a huge part of every limited company operating in the UK. The best way to achieve this is to be logical and keep yourself well-informed so that you are not penalised, your financial status is not hindered, and you maintain good relations with HRMC. Start off by implementing the aforementioned tips and applying payroll compliance as a significant aim for your business.
Keeping to the prescribed norms is not just a way to escape penalties—it is also a means of strengthening your business for a subsequent rise to the top.