HMRC Payroll Penalty Calculator

Calculate potential HMRC penalties for late RTI payroll submissions, PAYE underpayments, and incorrect filings. Understand the costs of payroll errors.

HMRC Payroll Penalty Calculator

Frequently Asked Questions

What are HMRC RTI penalties for late payroll filing?

HMRC penalties for late RTI Full Payment Submission (FPS): 1–9 employees: £100/month. 10–49 employees: £200/month. 50–249 employees: £300/month. 250+ employees: £400/month. Crucially, the first 3 late months attract only a warning — penalties start from the 4th late month.

What is an RTI submission?

Real Time Information (RTI) requires employers to submit a Full Payment Submission (FPS) to HMRC on or before each payroll date, for every pay period. The FPS includes each employee's pay, deductions, NI, and PAYE details. Late or missing FPS triggers penalties.

How are late PAYE payment penalties calculated?

Graduated penalties for late PAYE: First 3 months late — no financial penalty (warning only). Months 4–6: 1% of unpaid amount. Months 7–9: 2%. Months 10+: 3%. Plus interest at Bank Rate + 2.5% on all late payments from the due date.

What counts as a 'reasonable excuse' for late RTI?

HMRC accepts: serious IT failure (not poor planning), serious illness of sole business owner, fire/flood/theft of payroll records, or death of a close relative just before the deadline. 'Didn't know about RTI' is not a reasonable excuse. Always submit as soon as possible after the deadline.

What is a PAYE underpayment penalty?

If HMRC investigates and finds PAYE/NI underpayment, penalties depend on behaviour: careless error — 0–30% of underpaid tax. Prompted disclosure — 0–30%. Unprompted disclosure — 0–30% (reduced). Deliberate non-compliance — 20–70%. Concealment — 30–100%.

Can I appeal an HMRC payroll penalty?

Yes — appeal within 30 days of the penalty notice using form P280 or online. Grounds: reasonable excuse, or dispute the penalty amount. HMRC's First-tier Tribunal can hear appeals if HMRC doesn't accept your grounds. Legal/accountancy support recommended for penalties over £1,000.

What is the monthly PAYE payment deadline?

For most employers, PAYE must be paid to HMRC by the 19th of the following month (22nd for electronic payment). Annual payments may apply for small employers paying less than £1,500/month in PAYE/NI. Quarterly payment agreements available for small employers.

What software is compliant for RTI submissions?

HMRC-recognised payroll software: Sage Payroll, Xero Payroll, QuickBooks Payroll, BrightPay, IRIS, and others. HMRC's Basic PAYE Tools (free) is available for employers with 9 or fewer employees. Check HMRC's full list at gov.uk/paye-software.

What is an Employer Payment Summary (EPS)?

An EPS is submitted when you have no employees to pay that period, or to claim deductions (statutory maternity pay, small employer relief, CIS deductions). It must be submitted by the 19th of the month following the tax month — failure triggers false underpayment notices.

What happens if I over-pay an employee in payroll?

HMRC may query overpayments — especially if RTI shows higher earnings than expected. Correct via payroll adjustment in the next pay period. If the employee has left, recovery is more complex. Accidental overpayments to a former employee can be reclaimed as an employment debt.

Are there penalties for incorrect P60s or P11Ds?

P60s given incorrectly to employees must be amended. P11D errors (benefits-in-kind) carry penalties: careless inaccuracy — 0–30% of understated tax. Employers have 3 years to correct. P11D deadline is 6 July following the tax year end.

How do I minimise payroll compliance risk?

Key steps: use HMRC-recognised payroll software, set calendar reminders for FPS and payment deadlines, reconcile payroll monthly, keep employee records updated, conduct annual P11D review for benefits, and use an accountant or payroll bureau for compliance oversight.