HM Revenue and Customs (HMRC) have issued a guide to late payment penalties for all employers and contractors. The penalties apply to periods starting on or after 6th April 2010. The full guidance is available on their website at www.hmrc.gov.uk/paye/problems-inspections/late-payments.htm.
The penalties will be a percentage of the total amount that is late in the tax year. The first overdue payment is excluded from this calculation, so if you only make one late payment, and it is less than 6 months overdue you shouldn’t be charged a penalty. Subsequently the charges are 1% if 2 to 4 payments are late, 2% for 5 to 7 late payments, 3% for 8 to 10 late payments, and 4% for 11 or more. Additional charges apply to payments over 6 months late.
To avoid a penalty you can pay on time, notify HMRC if there is no payment due, or contact them if you will have difficulty paying.