HMRC - Direct Debits for PAYE

WHY SET UP A DD FOR PAYE?

If you're a business owner and an employer you'll already know how many different tasks compete for your time. Even if you have admin staff looking after elements of the finances, often control of the bank accounts and the responsibility for making non-automated payments will fall on you. HMRC have been tightening up their enforcement when it comes to paying PAYE on time but have also introduced (in 2023) a DD system that captures ongoing PAYE liabilities (previously it was only possible to set up DDs for isolated payments or payment plans for arrears.

The DD system uses data from your regular payroll submissions and will schedule each monthly payment for just after the due date of the 22nd. Payments will take account of Employment Allowance (as long as you have told HMRC that you're claiming it), statutory deductions like SMP, CIS (Construction Industry Scheme) liabilities, and the one-off annual payment of Class 1A NICs on benefits in kind (once a year in July, again assuming that your submissions have been made on time).

HOW TO SET UP THE DD

The business owner or authorised person will need to log on to the organisation's own Government Gateway account. If PAYE hasn't yet been added to the visible taxes/services on the GG account you will need to do this first.

Once that's been done and PAYE is visible, in the PAYE 'box' on the home page you should see an option to "Set up direct debit". Click this and follow the process, which will involve entering an email address, validating that address, and finally entering your bank details and confirming that you have authority to instruct direct debits.

HOW IT WORKS

So long as your payroll and related submissions (e.g. P11D and CIS) are up to date, you'll receive an email a few days before the DD is due, reminding you and letting you know that you can see a breakdown of the amount if you log in to your GG account. The payment date won't be specified but it won't be before the due date of the 22nd. CMM have used this system since it began in 2023 and the payment dates have varied from the 23rd to the 25th. As HMRC are in control of the payments none of these payments have been treated as late, even though the due date if paying by BACS would have been between the 20th and 22nd.