PAYE late payment
PAYE turns the usual question round: the ladder climbs with how often you pay late, not how long. The first late month in a tax year never counts, the second starts the meter at 1%, the tenth default doubles it twice over, and anything still unpaid at six months collects 5% regardless of the count.
Which months count
counts as a default the first one, free
Percentages per Sch 56 FA 2009, in force for PAYE since the 2010-11 tax year; verified against the HMRC guidance on late payment penalties for PAYE and National Insurance, checked 18 July 2026.
The ladder applies one rate, set by the number of defaults the tax year collects, to the total amount paid late, ignoring the earliest late month; the calculator assumes equal monthly amounts. The free first month is an in-year rule only: the 5% steps at six and twelve months bite on anything still unpaid, even where that one month was the only default. Annual charges such as Class 1A have no free first late payment.
The percentages cover PAYE, Class 1 National Insurance, student loan and Construction Industry Scheme deductions. Due dates run to the 19th of the month by post and the 22nd electronically. In practice HMRC issues penalty notices on a risk-assessed basis, with warning letters first; the liability arises from the statute, not from the letter.
Daily interest runs on every unpaid amount from its due date, at a rate tied to the Bank of England base rate; it is not in these figures. Whether a payment counts as a default in a borderline case, and whether an excuse is reasonable, is HMRC’s judgment and then the tribunal’s, and none of it is arithmetic. How we check these numbers.