How to pay your PAYE and NI is a straight forward question and one that we get asked on a regular basis. Not because it is difficult but because you don’t do it very often so it seems harder a bit like a man asking for directions when he is quite clearly lost. If you wish to read the HMRC answer of How To Paye then click the link and good luck or you can follow our simple to follow guide below.
How to pay PAYE
When you registered for PAYE with HMRC you would have been sent a PAYE Registration Letter and a PAYE Payment Booklet from the nice people at HMRC. It may have taken a long time and been sent to the wrong business but you would have received it eventually. If you are not sure then see examples below as you will need this information to pay PAYE and NI. If you haven’t registered for PAYE with HMRC shame on you go and do it now then come back when you get your letter or payment booklet.
PAYE and NI Registration Letter
Here’s one I made earlier. Inside the red circles you will find your Accounts Office reference which is what you enter as your payee reference when making an electronic bank payment and also your Employer PAYE reference which you need for running your payroll.
If you are making electronic payments you must add another 4 digits to the end of your 13 digit Accounts Office reference which takes the form of the tax year and the month number i.e. June 2012 will be 1302 being the 2012-13 tax year and the second month of the tax year. This is important to avoid HMRC allocating your payments to the wrong period and wasting your time chasing you for money you do not owe.
PAYE and NI Payment Booklet
Below you will find the first and last pages of the PAYE payment booklet which explains how to pay PAYE and the various options. It also highlights the PAYE office and bank account details that you need. Once you have the information as highlighted by the red circles recycle the book away as you will not need. Make payments online and get until the 22nd of the following month to make payment not the 19th if paying by cheque and snail mail. If the 22nd falls on a weekend or bank holiday make sure you make payment to be received the working day before.
P32
A P32 is the report that tells you how much PAYE and NI to pay. This will normally be in a report format but may just be provided to you from your payroll bureau in an email. If you use online accoutning software like FreeAgent it will be available in your tax timeline telling you how much PAYE to pay and when it is due.
Don’t forget that if you estimate that your average total payment will be less than £1,500 per month then you can make quarterly payments instead keeping those hard earned pennies in the bank for just a little longer. The quarterly payments will be for periods ending 5 July, 5 October, 5 January and 5 April.
Pay PAYE
Lastly go into your online banking system and set up HMRC as a payee using the bank details provided on your HMRC Payment Booklet highlighted above and using your P32 information make the payment not forgetting to use the correct 17 digit Accounts Office reference. Each month or quarter all you need to do is make the payment from the information provided on the P32 and change the PAYE payee reference. It may seem like a pain but it may save you time in the long run.
