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Update to Direct Debits for PAYE

October 25, 2022
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Update to Direct Debits for PAYE


HMRC have recently published in their August Employer Bulletin that direct debits for PAYE can now be set up to link to your RTI submissions, CIS, P11ds and amended prior year submissions. This is being called a variable direct debit payment plan in HMRC publications and will be available from 19th September.

Automation for PAYE payments has been long overdue, in our opinion, as the VAT direct debits have been taken post submission for a long time now, and RTI has been in place since 2012, with HMRC knowing what employers owe them in ‘Real Time’.

This will hopefully reduce underpayments to HMRC, and a reduction penalties. Most employers remember to pay the normal PAYE to HMRC on time, but not necessarily the P11d Class 1A – we see a lot of underpayments occurring in this area, year on year.

The service is not available through the Agent access to HMRC. It will only be available on the employer HMRC access, where employers can view, amend and/or cancel their direct debits. Therefore, your agent will not have access or authorisation to do this on your behalf.

If your agent already processes your PAYE payments using another payment method on your behalf, then please do not set up a direct debit payment plan until you have spoken with your agent about how you want to pay HMRC in the future.

Employers can access this facility through their HMRC account which will have an amended screen display to assist. A new link ‘Set up a Direct Debit’ will show on the employer account, and once set up will change to ‘Manage your Direct Debit’. The employer will be able to view, change or cancel the direct debit online.

If an employer signs up to the variable direct debit payment plan, HMRC will collect the below charges on receipt of the relevant returns:

  • Full Payment Submission (RTI – FPS)
  • Employer Payment Summary (RTI – EPS)
  • Construction Industry Scheme
  • Apprenticeship Levy (via RTI – EPS)
  • Class 1A National Insurance (P11d )
  • Year to date FPS (RTI – YTDFPS)

One note of caution; if you change payroll software or payroll bureau this can cause problems with the RTI submissions. A change in software can result in HMRC duplicating employee records on their systems, which in turn can generate an incorrect PAYE underpayment. This is a well known RTI error on HMRC systems and is still sporadically affecting our clients even now! So if you utilise the variable direct debit payment plan, be careful the correct amount is going to be taken if you do make any software or provider changes!

The full publication can be found using this link: https://www.gov.uk/government/publications/employer-bulletin-august-2022