When you employ staff in the UK, you’re legally responsible for operating the PAYE system on behalf of HM Revenue and Customs (HMRC). PAYE, short for Pay As You Earn, allows HMRC to collect Income Tax, National Insurance contributions, student loan repayments, and other statutory deductions directly from your employees’ wages.
As an employer, you’re required not only to calculate and deduct these amounts but also to pay them over to HMRC on time and in full. Failing to do so can result in penalties, interest, and complications with your HMRC account. This guide will walk you through how to pay the employer PAYE bill correctly, from deadlines to payment methods, and explain how services like EOR Services UK can help ensure smooth compliance.
Understanding PAYE Deadlines and Liabilities
Deadlines are critical when it comes to your PAYE responsibilities. Most employers make monthly payments and must submit their PAYE bill to HMRC by the 22nd of the following tax month if paying electronically. If you’re paying by post or cheque, the deadline shifts earlier, to the 19th. For example, for wages paid in April, the PAYE bill must reach HMRC by May 22nd if paid online, or by May 19th via post. Some smaller employers may qualify for quarterly payments if their average monthly liability is less than £1,500. Regardless of your frequency, consistency in meeting these deadlines is crucial to avoid late payment penalties.
Each PAYE bill typically includes multiple components: income tax deductions from employee wages, employee and employer National Insurance contributions, and possibly student loan repayments. Larger employers may also owe the Apprenticeship Levy or Class 1A NICs for Benefits in Kind. If any prior underpayments exist, those amounts are added to your current bill, along with applicable interest or penalties. All these figures are informed by your monthly submissions to HMRC—namely, the Full Payment Submission (FPS) and the Employer Payment Summary (EPS). Submitting either late or with errors can result in HMRC issuing “specified charges,” which are estimated amounts used in place of missing data.
How to Make Your PAYE Payments
Choosing the right payment method is vital for ensuring your PAYE payment arrives on time. The most reliable option is paying through online banking using your PAYE Accounts Office reference number. This ensures fast transfer and accurate allocation. Debit and corporate credit card payments are also accepted, though the latter includes a processing fee. Setting up a Direct Debit from your HMRC business account is convenient for recurring payments, but requires extra time for the first setup. Traditional methods like paying at your bank or sending a cheque are still possible but carry earlier deadlines and a higher risk of delays. Increasingly, many businesses use integrated payroll software that can automate the PAYE payment process and minimize human error.
Regardless of the method you choose, what matters most is timely and correct execution. A late payment—even by a single day—can result in penalties or interest. Moreover, missing or incorrect payment references can cause your payment to be misallocated, triggering a late payment penalty even when you’ve paid on time. Always review and verify payment details before submission. Using the correct reference number, amount, and tax month or quarter suffix is essential for smooth processing.
Using the Right Payment Reference
Every PAYE payment you make must include your correct 13-character Accounts Office reference number. This reference ensures that your payment is properly applied to your business’s HMRC account and the correct tax period. When paying for a specific tax month, you must add a four-digit suffix to this reference. For example, a payment for April (month 1) in the 2023–24 tax year would include “2301” at the end, creating a 17-character reference string. Reusing references from past months or years can result in a misapplied payment, leaving you vulnerable to penalties. You can find your correct Accounts Office reference number on HMRC correspondence, your online employer account, or previous payment confirmations. HMRC also provides an online tool to help confirm the correct reference before you pay.
If you still use HMRC payment booklets or payslips, double-check that they correspond to the current tax period. These paper documents include pre-filled references and must be accurate to prevent issues. However, HMRC is phasing out physical payslips in favor of digital methods. By shifting to online payments and electronic references, you retain better control over your records and reduce the risk of misallocation.
Managing Multiple PAYE Schemes
Some businesses operate multiple PAYE schemes, either due to having different branches or separate payrolls for different employee groups. In such cases, it’s important to pay each PAYE bill individually using the relevant Accounts Office reference for that scheme. Combining payments under a single reference without HMRC’s instruction can create confusion and may result in penalties for unpaid or misallocated liabilities. Managing multiple schemes requires careful organisation. You should keep a separate payment calendar for each one and consider assigning responsibility to a dedicated payroll manager or an automated payroll system. Storing each reference number in your banking system can also help avoid mix-ups.
Failure to manage multiple schemes correctly can result in a cascade of late payment notices, misapplied payments, and a backlog of administrative issues with HMRC. Being thorough with recordkeeping, scheduling, and reference use is key. A structured approach can help your business stay compliant, regardless of how many PAYE schemes it operates.
How EOR Services UK Can Help
Understanding and handling PAYE requirements can be time-consuming and fraught with risk, especially for small and mid-sized businesses. This is where EOR Services UK can offer invaluable support. As a trusted Employer of Record provider, we handle PAYE processing as part of our comprehensive payroll and HR solutions.
From calculating correct deductions to submitting payments with the correct references and staying ahead of all deadlines, our expert team ensures your PAYE responsibilities are always met. Whether you’re paying monthly, quarterly, or managing multiple schemes, we can streamline the process, reduce errors, and protect you from penalties. Our deep understanding of UK payroll compliance allows your business to focus on growth while we handle the technicalities.
Conclusion
Meeting your PAYE responsibilities is an essential part of being a UK employer. It’s not just about paying what you owe—it’s about doing so on time, using the right methods, and submitting accurate references. A small oversight can lead to a late payment penalty, interest charges, or confusion in your HMRC account. Therefore, understanding how PAYE works, what’s included in your bill, and how to handle payment logistics is crucial. Taking a proactive, organised approach to payroll compliance benefits your business far beyond avoiding fines—it signals reliability and professionalism. With the right tools, habits, and support, such as the solutions offered by EOR Services UK, paying your employer’s PAYE bill can become a routine task rather than a recurring worry.
