From October 3rd 2022, employers now have the option of setting up a new variable recurring direct debit plan for PAYE and national insurance. In this blog, we're chatting you through the new system and what it could mean for you and your business.
Direct Debit
The previous system only allowed a single payment to be made via direct debit. With the updated system, employers can set up a new variable direct debit payment plan. This means you can now set up a direct debit to either:
Pay your bill automatically
Make a single payment
You can pay the following charges using this type of Direct Debit:
Full Payment Submission (FPS)
Employer Payment Submission (EPS)
Construction Industry Scheme (CIS)
Apprenticeship Levy (AL)
Class 1A National Insurance
Earlier Year Update
The direct debit will have a cap of £20 million return payments. You also cannot pay any interest or penalties you owe using this type of direct debit.
How do you set up automatic payments?
If you're an employer looking to set up automatic payments via direct debit, simply login to your Business Tax Account or access via your liabilities and payments screens on the PAYE service. From here you can select the option to set up a regular direct debit which will authorise HMRC to collect directly from your bank account based on your return submissions.
HMRC recommends that you set up the direct debit at least 6 working days before your return date. They will usually take payment from the 23rd of each month or 4 working days after you file the return (if you file it after the 19th of the month).
How do I edit my automatic payments?
After your direct debit has been set up, you will see a "Manage your direct debit" link in your account. From here you can cancel and edit the direct debit.
Do I have to set it up?
As the gov.uk website states, "Employers are not being mandated to use direct debit VPP, they may choose to do so by logging into their Business Tax Account, Personal Tax Account, ePAYE or Government Gateway account and selecting the option to set up a regular direct debit."
Is it right for me?
As an employer, you might be interested in exploring direct debit to ensure that your tax and NI contributions are paid on time as it benefits from being low maintenance and low cost in the long run.
If you would like to chat in more detail about your unique circumstances, please get in touch today to book your FREE initial consultation. Give Catherine a call on 01423 431889 or email catherine@bctaccountants.co.uk.
Please note: all stats are accurate for the 2022/23 tax year.
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