How to pay PAYE and National Insurance when the cash isn't there yet

Your PAYE and National Insurance bill has to reach HMRC by the 22nd of the next tax month, or by the 19th if you pay by cheque through the post. That date is the awkward part of running a payroll: the wages left your account on payday, the tax on them follows about three weeks later whether or not your customers have paid you, and the 22nd doesn't move. Miss it and interest starts the same day, though your first late payment in a tax year carries no penalty.

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When your PAYE bill is due, and what's in it

The 22nd is the day the money has to reach HMRC, not the day you send it, so a Bacs payment started on the 20th is already late.

HMRC's tax months run from the 6th of one month to the 5th of the next, which is why the date feels three weeks out of step with payday. Everything you paid your staff between 6 April and 5 May is due by 22 May, and so on through the year.

The bill itself is the Income Tax and National Insurance you deducted from your employees' pay, plus your own employer National Insurance, less any reduction you claimed on an Employer Payment Summary before the 19th. It can also pick up Student Loan deductions, Class 1A National Insurance on termination awards, Construction Industry Scheme deductions if you pay subcontractors, and the apprenticeship levy if your annual pay bill is over £3 million.

Your payroll software works the total out and shows it on the employer payment record, the one most people still call the P32. Your HMRC online account shows the same figure once HMRC has processed the Full Payment Submission you sent on payday. It is worth checking that the two agree before you pay, because that is where an unwelcome surprise usually comes from.

If you usually pay HMRC less than £1,500 a month, you may be able to pay quarterly instead. It isn't automatic: you arrange it by calling HMRC's employer PAYE payment helpline. The quarters end on 5 July, 5 October, 5 January, and 5 April, so those payments fall due on 22 July, 22 October, 22 January, and 22 April. Paying quarterly changes when you pay, not when you report: you still file on or before every payday.

One reason the figure may be smaller than you expect: if your company qualifies, the Employment Allowance takes up to £10,500 a year off the employer National Insurance part of the bill.

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Getting the money to HMRC in time

The method you choose decides how late you can safely leave it. Approving a payment in your online banking is usually instant; Bacs takes three working days. If you are reading this on the 20th, the top three rows are the ones you need.

HMRC's account for employers' PAYE is HMRC Cumbernauld, sort code 08 32 10, account number 12001039.

The Direct Debit is the one worth setting up early, because you only do it once. HMRC then collects the amount from your latest Full Payment Submission shortly after the 22nd, tells you the date and the amount at least three working days beforehand, and shows it on your statement as 'HMRC SDDS'. It isn't available for payments over £20 million, for a PAYE penalty, or for a PAYE Settlement Agreement.

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The reference that decides where your money lands

Use your 13-character accounts office reference number, with no spaces. It is not your employer PAYE reference: the two look different, and only one of them tells HMRC which account to credit.

You will find it in your HMRC online account if you have enrolled for PAYE online, or on the letter HMRC sent when you registered as an employer. If your accountant set the scheme up, that letter went to them.

Get it wrong and the payment may be delayed, or used against a different tax bill you owe. The money leaves your account either way, which is how a company ends up with a late payment notice for a bill it has already paid. If that happens, call HMRC's employer helpline and ask for the payment to be moved.

Paying early or late adds four digits to the end of that reference: the last two of the tax year you are paying for, then the number of the month within the tax year. gov.uk's own example is a payment for 6 May to 5 June 2024, which takes 2502, because the tax year ends in 2025 and it is the second month of that year. You update the four digits each time, and HMRC's online service works them out for you if you pay that way.

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What missing the 22nd costs

Interest runs daily from the day the payment was due, at 7.75% a year since 9 January 2026. What the penalty adds on top depends on how many times you have already been late in the same tax year.

Your first failure to pay on time in a tax year is not counted as a default, so one slip usually costs you interest and nothing else. After that the penalty is a percentage of whatever is late in that tax month, and it climbs with the count: 1% for the first three defaults, 2% for the fourth to the sixth, 3% for the seventh to the ninth, and 4% beyond that.

Two further penalties sit outside that ladder, and they are the ones that catch a bill left to drift. If a monthly or quarterly payment is still unpaid after six months, HMRC adds 5% of what is outstanding, and a further 5% after twelve months. Those two apply even where only one payment in the whole tax year was late.

Percentages are hard to add up, so here is one bill in cash: a £10,000 payment, with the 1% band applied because it is not the company's first slip of the year.

The jump is between a month and six months, and it is not the interest that does it. It is the first 5%.

HMRC will usually tell you if it thinks you have paid late, by letter or through a notice in PAYE Online. A penalty notice has to be paid within 30 days or interest starts running on the penalty too, and you can appeal it online through HMRC's PAYE for employers service. Having a Time to Pay arrangement already in place is one of the grounds HMRC lists for an appeal, which is the reason to ask before the deadline rather than after it. The penalties for late tax payments work differently for every tax, so the figures above are PAYE only.

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Filing late is charged separately

You report what you paid your staff on or before each payday, on a Full Payment Submission, and sending that in late carries a monthly penalty of its own: £100 if you have one to nine employees, £200 for 10 to 49, £300 for 50 to 249, and £400 for 250 or more.

Three things stop it. HMRC will not charge the penalty if every payment on a late submission reached your employees within three days of payday, if you are a new employer whose first submission arrived within 30 days of paying someone, or if it is your first late report of the tax year.

That is the reason to file even in a month you cannot pay. Filing and paying are two separate obligations, and missing both costs more than missing one.

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If the cash isn't there on the 22nd

File anyway, pay what you can against the right reference, and call HMRC before the deadline to ask about a payment plan.

HMRC calls that plan a Time to Pay arrangement, and it spreads the bill over monthly instalments. In order:

1. File your Full Payment Submission on or before payday, whatever the cash position. The filing penalty is separate, and it starts at £100 a month.
2. Check the figure on your payroll software's employer payment record, and in your HMRC online account.
3. Pay what you can by the 22nd, using your accounts office reference. Interest and penalties are charged on what is unpaid, not on the original total.
4. Ask HMRC for a payment plan. An online service checks whether your company is eligible and sets the plan up; if you cannot use it, call the employer PAYE payment line on 0300 200 3819, Monday to Friday, 08:00 to 18:00.
5. Keep to the plan. HMRC can cancel an arrangement you break, and ask for the balance in full.

Before you call, have the reference for the tax you cannot pay, a UK bank account you are authorised to set up a Direct Debit from, and a realistic monthly figure worked out from your company's income and spending. HMRC agrees a plan only if it believes you can keep to it, and interest keeps running on the balance either way.

For a company already in tax debt, HMRC expects you to reduce the debt as far as you can first, by releasing assets like stock, vehicles, or shares. It may also ask directors to put personal funds into the business, accept lending, or extend credit. A short cash flow forecast is the quickest way to show that a plan is realistic, and you will need the same piece of work whichever route you take.

If you do not get in touch at all, or you cannot agree a plan, HMRC can ask a debt collection agency to collect the money, take it directly from the company's bank account, take things the company owns and sell them, take you to court, or close the company down. It tells you before it takes any of those steps, and explains your rights and the costs at the time. Arrears can also follow you: they show up in credit checks, and can count against an application for business finance later on.

If the shortfall is likely to repeat, borrowing is not the answer to it. PAYE comes round every month, so a payment plan plus a hard look at the wage bill will serve you better than finance that has to be repaid on top. Where you have any say in it, moving payday closer to the week your customers actually settle takes pressure off both dates at once.

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When the money is coming, just not by the 22nd

If payday comes before a big customer pays you, a Flexi-Loan can cover wages so your team is paid on time. The tax on those wages follows three weeks later, on the 22nd, and lands in the same squeeze. In a month when a VAT return or a corporation tax payment falls in those same few weeks, the 22nd is usually where the pressure shows up first.

On interest alone, a Time to Pay arrangement is the cheaper route, because 7.75% a year on a falling balance is less than any commercial rate. Borrowing answers a different question: not how to spread a bill your company cannot afford, but how to pay one on time when your own money is simply arriving late. That is a timing problem rather than a shortfall, and it bites hardest on companies that invoice on long terms, bill a small number of large customers, or carry a wage bill that does not move when sales do.

An iwoca Flexi-Loan is a business loan with flexible repayment options, from £1,000 to £1m. You choose a fixed term of between 12 months and five years, so you know the repayment schedule from the outset, and there is no fee for repaying early – many of our customers only take out our finance for a few weeks, or even days. So you can pay HMRC in full on the 22nd, and clear the loan the week the invoice you are waiting on is settled. Where the gap is the wages themselves rather than the tax on them, a payroll loan covers the same moment.

A quick decision is not a light one. We look at your revenue and what your business can afford to repay before we make an offer, and our credit team reviews larger or more complex applications – which is why a decision is made within 24 hours, but might be longer depending on the complexity of the request.

Flexi-Loan in action: CQD Cleaning Services

Mark Natthan's cleaning business has clients who settle well after the work is done, and a payroll that will not wait for them. He draws £10,000 to £20,000 towards month-end when cash flow is tight, and repays as the clients pay – more than 80 times over nine years, £1.4m in total, without a late repayment. Read Mark's story.

Our research, published in April 2026, surveyed 1,005 small business owners: 38% said they would need more than 30 days to secure extra funding, and 28% had two months or less of cash in reserve. So the month before a payroll run would stretch your company is a better time to look at the options than the week the bill is due. Our Cash Flow Resilience Benchmark is a free way to see how your cash position compares with other UK small businesses.

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PAYE and National Insurance FAQs

Are PAYE and National Insurance the same thing?

No. PAYE is the system HMRC uses to collect Income Tax and National Insurance from pay, and National Insurance is one of the things collected through it. Your PAYE bill holds both: what you deducted from your employees' pay, and your company's own employer National Insurance.

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What if I owe HMRC nothing this month?

Tell HMRC anyway. If you did not pay anyone in a tax month, send an Employer Payment Summary by the 19th of the following month, and no Full Payment Submission. Skip it and HMRC may send a notice, estimate what it thinks you owe, and charge a penalty.

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What if a VAT or corporation tax bill falls in the same month?

Treat them as separate deadlines, because the rules and the penalties differ by tax. For that one, see how to pay your VAT bill. If you cannot pay either, you may be able to add another tax to a payment plan you are setting up.

Check your figures with an accountant. This is general information about paying PAYE and National Insurance, not tax advice. An accountant or your payroll provider can confirm what your company owes, whether it can pay quarterly, and what to put in a payment plan proposal.

Sources:

• Pay employers' PAYE – GOV.UK
• Pay employers' PAYE: pay using another payment method – GOV.UK
• Pay employers' PAYE: pay by Direct Debit – GOV.UK
• Pay employers' PAYE: reference numbers for early and late payments – GOV.UK
• Running payroll: paying HMRC – GOV.UK
• Running payroll: reporting to HMRC – GOV.UK
• Running payroll: Employer Payment Summary – GOV.UK
• Late payment penalties for PAYE and National Insurance – GOV.UK
• What happens if you do not report payroll information on time – GOV.UK
• Interest on late payment of PAYE and CIS for employers – GOV.UK
• HMRC interest rates for late and early payments – GOV.UK
• If you cannot pay your tax bill on time – GOV.UK
• Setting up a payment plan – GOV.UK
• If you do not contact HMRC or refuse to pay – GOV.UK
• Payment problems: enquiries – GOV.UK
• Claim Employment Allowance – GOV.UK