PAYE direct debits - interest application
The option to pay PAYE liabilities by a recurring direct debit has been available for just over a month, but there have been concerns that the arrangement will attract late payment interest. HMRC has now clarified what will happen. What do you need to know?
The new system is intended to reduce administration for employers, who would previously have to set up a new direct debit each month. However, there have been some concerns that the date the payment is taken - the 23rd of the month (or next working day if this falls on a weekend) - is later than the payment deadline for electronic payments (the 22nd).
We're aware that employers using the new system have seen a confusing message on their account showing interest accruing, and a message implying this will be collected by direct debit. HMRC clarified the mechanics of the new system at a recent Agent’s Forum. Interest will initially show, but will be reversed once the direct debit is successfully processed. If the payment fails, the interest charge will stand and accrue until payment is made. The “direct debit will collect” message is merely to show that HMRC’s system is aware that there is a scheduled payment in process and is nothing to worry about.
Related Topics
-
Payment deadline for corporation tax
-
HMRC targets undeclared consultancy income in the medical sector
HMRC is writing to people working in the medical sector where information supplied by private healthcare providers suggests that consultancy fees may have been omitted from their tax returns. Recipients have 30 days to check their position and respond. What should you do if you get a letter?
-
MONTHLY FOCUS: BUSINESS AND AGRICULTURAL PROPERTY RELIEF: WHAT DO THE NEW IHT RULES MEAN FOR YOU?
The inheritance tax treatment of businesses and farms changed fundamentally from 6 April 2026. The amount that can qualify for 100% business property relief and agricultural property relief is now capped, potentially leaving families with a significant tax bill for the first time. What has changed, and what should business owners and farmers be doing about it?




This website uses both its own and third-party cookies to analyze our services and navigation on our website in order to improve its contents (analytical purposes: measure visits and sources of web traffic). The legal basis is the consent of the user, except in the case of basic cookies, which are essential to navigate this website.