ICAEW.com works better with JavaScript enabled.

TAX NEWS

Variable direct debits for PAYE

Article

Published: 06 Sep 2022 Update History

Functionality to allow employers to set up a recurring direct debit to pay PAYE and national insurance liabilities will launch early in October. ICAEW’s Tax Faculty provides more details.

The August 2022 issue of HMRC’s Employer Bulletin announced that a variable payment plan for PAYE and NIC liabilities would be introduced from 19 September 2022. However, there have been some delays and HMRC now expects the functionality to be available in early October. The current system allows only a single payment to be made by direct debit.

In response to questions raised by ICAEW’s Tax Faculty, HMRC has provided some further details about how the variable payment plan will work in practice.

First, HMRC has confirmed that the direct debit amount will be the figure declared on returns submitted by employers/payroll agents, or a lesser figure if any overpayments have been allocated to reduce the original declaration. The direct debit will never be greater than the value declared on the return and can never be more than £20m, in accordance with direct debit BACS rules.

Second, the money will be drawn on 23 of each month, or the next bank working day. The employer will receive an advance notice three days in advance of every collection date, to ensure they are notified of the amount being collected. There will be no additional interest charged to employers who choose to pay by variable direct debit payment plan, provided that their direct debit payment does not dishonour for whatever reason, (ie, insufficient funds, bank account closed, etc.).

Finally, HMRC has confirmed that its current guidance on filing deadlines remains unchanged.

Details about how to set up a variable payment plan can be found in HMRC’s Employer Bulletin. Agents cannot set up direct debits on behalf of clients, as banking rules require direct debits to be set up by a signatory to the bank account.

As this is a new service, employers may wish to monitor it carefully and check the notifications. ICAEW would welcome feedback from employers who choose to set up a variable payment plan. Please contact Peter Bickley to contribute.

ICAEW Know-How from the Tax Faculty

This guidance is created by the Tax Faculty, recognised internationally as a leading authority and source of expertise on taxation. The Faculty is the voice of tax for ICAEW, responsible for all submissions to the tax authorities. Join the Faculty for expert guidance and support enabling you to provide the best advice on tax to your clients or business.

Changelog Anchor
  • Update History
    15 Sep 2022 (03: 00 PM BST)
    This news item was updated to reflect the delay in the planned start date from 19 September to early October.
More support on tax

ICAEW's Tax Faculty provides technical guidance and practical support on tax practice and policy. You can sign up to the Tax Faculty's free enewsletter (TAXwire) which provides weekly updates on developments in tax.

Sign up for TAXwireJoin the Tax Faculty
The future of tax after COVID

As digital technologies transform society, the UK government is grappling with balancing the books while ensuring its tax system is fit for purpose. Join us as we take a look at the issues and challenges facing the tax system.

Read more

More from the Tax Faculty

Latest news
Making tax digital image
TAXwire

Stay up to date with the latest developments in tax by signing up to the Tax Faculty's weekly enewsletter

Practical guidance
Cover
TAXline

Comprehensive support for Tax practitioners each month from the Tax Faculty and expert contributors.

Technical support
Tax Faculty image
Webinars

Expert advice from the Tax Faculty's technical managers on all the developments in tax policy and practice.