The new rules will apply to all employers and contractors who must make PAYE payments to HMRC, including the following payments:
- income tax and Class 1 NICs collected via PAYE;
- Class 1A NICs on benefits;
- Class 1B NICs;
- student loan deductions.
The new rules to apply to PAYE payments due for tax years 2010/11 onwards, which means they will affect in-year payments due from May 2010 onwards. The first Class 1A NICs payment that the new rules will apply to is the payment due in July 2011.
The rules will also apply to the CIS scheme with effect from the 2011/12 tax year.
How the new penalties will work
From May 2010, penalties will become due in the following circumstances:
- more than one of the in-year PAYE payments due is late in any tax year, or
- any payment is very late.
The penalties for in-year late payments are as follows:
Payments less than six months late: