TAXguide 18/21: PAYE and BIK payments to HMRC

ICAEW receives reports from time to time that HMRC has misallocated employers’ payments of PAYE and Class 1A NIC.

There are various steps that can be taken to help to ensure that employer payments to HMRC are allocated to the right place.

Use the correct HMRC bank account

HMRC has two bank accounts for employer payments, and they have different account numbers and names:

• for PAYE and Class 1A NIC: sort code 08-32-10, account number 12001039, account name HMRC Cumbernauld, and
• for Class 1B NIC and penalties for late filing and payment: sort code 08 32 10, account number 12001020, account name HMRC Shipley.

Cite the correct reference number when making the payment

PAYE

For PAYE paid from 6 April to 5 April in the tax month in which is due (ie the tax month containing the due dates of 19/21 of the month following that in which the employees were paid) use the 13-character accounts office reference number as the payment reference.

The HMRC accounts office reference is in the format 123AB45678910 and can be found on:

• the letter HMRC sent when the employer first registered the PAYE scheme, or
• the front of the payment booklet or the letter from HMRC that replaced it.

Four additional digits need to be added to the reference if payments are made early or late.

Early for employers who pay monthly means that payment is made before the 6 of the tax month in which payment is due and for employers who pay quarterly it means payment is made before the 6th of the second month in the quarter.

Late for employers who normally pay monthly or quarterly means payment is made on or after the 5th of the tax month after payment was due.

The four additional digits comprise the last two digits of the tax year (thus for 2021/22 add 22) and the tax month number (thus for April add 01).

So, for a payment made in December 2021 which should have been made in July 2021 for payments to employees in the June tax month add 2203 to the 13-character accounts office reference.

HMRC has a tool to help employers work out the number to use where payment is for the current year, and another tool if the payment was for a previous tax year.

Class 1A: Benefits-in-kind and expenses reported on form P11D(b)

Pay into the first of the two HMRC bank accounts noted above. The payment reference needs to be 17 characters, the 13-character accounts office reference number with a suffix comprising the tax year for which payment is being made and the digits ‘13’. For example, Class 1A NIC for 2020/21 the reference will be in the format 123AB456789102113.

Class 1B: PAYE settlement agreements

Pay into the second of the two HMRC bank accounts noted above. Employers should use the PAYE Settlement Agreement (PSA) reference number as the payment reference. It starts with an X and is on the payslip sent by HMRC. Employers who cannot find their PSA number should contact the office dealing with the application.

PAYE late payment or filing penalties

Pay into the second of the two HMRC bank accounts noted above. Employers should cite the penalty reference number as the payment reference. This starts with an X and will be on the penalty notice received from HMRC.

Bank accounts which do not allow sufficient space for 13- or 17-character references

We understand that the online banking facilities offered for some bank accounts do not allow space sufficient to cite 17-character reference numbers.

Getting round this problem might necessitate changing bank accounts. It should be possible to do this without also changing banks.

Payments from overseas

See HMRC’s guidance:

• PAYE payment references
• Class 1A references
• Class 1B references
• PAYE late payment or filing penalty references