PAYE & RTI: What Every UK Employer Must Know

Sep 22, 2025

PAYE & RTI Explained: A Director’s Guide to Payroll Compliance in the UK

Understanding PAYE & RTI Compliance

Running payroll is one of the most important responsibilities for UK directors. HMRC requires employers to deduct income tax and National Insurance Contributions (NICs) through the Pay As You Earn (PAYE) system, and to report payments in real time using RTI (Real Time Information).

For many directors, this process can feel unnecessarily complex — but mistakes can result in reporting penalties, late payment interest, and unnecessary HMRC scrutiny. In this guide, we explain PAYE and RTI in plain English, highlight your key responsibilities, and show how expert support can help you stay compliant without stress.

PAYE: The Basics for Employers

What PAYE is: HMRC’s system for collecting Income Tax, employee NIC, student loans, and deductions from wages before payment.
Who it applies to: All employers, including limited companies paying directors.
What’s deducted: Income Tax, employee NIC, student loans, and pension contributions (if applicable via PAYE).

PAYE ensures tax and NIC are collected as earnings are paid — rather than in a lump sum at year-end.

Real Time Information (RTI): HMRC’s Reporting Standard

RTI requires employers to send HMRC payroll information “on or before” payday.

Key submissions include:

Full Payment Submission (FPS): Sent every payday, showing gross pay, deductions, NIC, and other details.
Employer Payment Summary (EPS): Used for adjustments (statutory payments like SMP/SSP, claims for Employment Allowance, and other corrections).

Missing RTI deadlines can trigger automatic penalties, even if tax/NIC payments are made on time.

PAYE & RTI Deadlines Employers Must Meet

Monthly PAYE/NIC payments: Must reach HMRC by the 22nd of the following month (if paid electronically).
Quarterly payments: Available for smaller employers whose PAYE/NIC liability per month is under £1,500.

Year-end obligations:

P60 for all employees by 31 May.
P11D & P11D(b) for benefits by 6 July.
Class 1A NIC on benefits by 22 July (if electronic submission).

Common Payroll Mistakes & Penalties

Directors often fall into traps such as:

Missing FPS or EPS filing deadlines.
Using incorrect tax codes.
Forgetting to claim or submit EPS for adjustments.
Paying PAYE/NIC late.

Penalties include:

Late reporting penalties: If you fail to send required FPS/EPS on time, HMRC charges monthly fines depending on number of employees:
• 1–9 employees: approx £100/month
• 10–49: £200/month
• 50–249: £300/month
• 250 or more: £400/month.
Late payment penalties for PAYE/NIC:
• Defaults early in the year (first one or two late payments) may incur small penalties, escalating if more defaults in same tax year.
• If payments are 30+ days late, HMRC applies a 5% penalty on the outstanding amount.
• Additional 5% penalties apply after 6 months and again after 12 months for amounts still unpaid.
Interest charges accrue daily on PAYE/NIC payments that are late.
Repeated failures: Consistently missing filings or payments increases HMRC scrutiny; you may receive penalty notices, warnings, or require justification (reasonable excuse required) to avoid or reduce penalties.

How Wexley & Associates Supports Employers

PAYE and RTI compliance can be deceptively complex, particularly for directors balancing multiple obligations. At Wexley & Associates, we help clients:

File RTI submissions (FPS & EPS) accurately and on time.
Avoid penalties by monitoring deadlines and ensuring payments to HMRC are made when due.
Optimise director pay (salary vs dividends) and NIC planning.
Minimise administrative burden and provide oversight so nothing slips through.

Keep Payroll Stress-Free

Payroll doesn’t have to be a headache. With the right support, directors can stay compliant, protect their business from costly penalties, and free up time to focus on growth.

Contact Wexley & Associates today for expert payroll management and tailored PAYE advice.

References

PAYE & RTI Explained: A Director’s Guide to Payroll Compliance in the UK

Understanding PAYE & RTI Compliance

PAYE: The Basics for Employers

What PAYE is: HMRC’s system for collecting Income Tax, employee NIC, student loans, and deductions from wages before payment.
Who it applies to: All employers, including limited companies paying directors.
What’s deducted: Income Tax, employee NIC, student loans, and pension contributions (if applicable via PAYE).

PAYE ensures tax and NIC are collected as earnings are paid — rather than in a lump sum at year-end.

Real Time Information (RTI): HMRC’s Reporting Standard

RTI requires employers to send HMRC payroll information “on or before” payday.

Key submissions include:

Full Payment Submission (FPS): Sent every payday, showing gross pay, deductions, NIC, and other details.
Employer Payment Summary (EPS): Used for adjustments (statutory payments like SMP/SSP, claims for Employment Allowance, and other corrections).

Missing RTI deadlines can trigger automatic penalties, even if tax/NIC payments are made on time.

PAYE & RTI Deadlines Employers Must Meet

Monthly PAYE/NIC payments: Must reach HMRC by the 22nd of the following month (if paid electronically).
Quarterly payments: Available for smaller employers whose PAYE/NIC liability per month is under £1,500.

Year-end obligations:

P60 for all employees by 31 May.
P11D & P11D(b) for benefits by 6 July.
Class 1A NIC on benefits by 22 July (if electronic submission).

Common Payroll Mistakes & Penalties

Directors often fall into traps such as:

Missing FPS or EPS filing deadlines.
Using incorrect tax codes.
Forgetting to claim or submit EPS for adjustments.
Paying PAYE/NIC late.

Penalties include:

Late reporting penalties: If you fail to send required FPS/EPS on time, HMRC charges monthly fines depending on number of employees:
• 1–9 employees: approx £100/month
• 10–49: £200/month
• 50–249: £300/month
• 250 or more: £400/month.
Late payment penalties for PAYE/NIC:
• Defaults early in the year (first one or two late payments) may incur small penalties, escalating if more defaults in same tax year.
• If payments are 30+ days late, HMRC applies a 5% penalty on the outstanding amount.
• Additional 5% penalties apply after 6 months and again after 12 months for amounts still unpaid.
Interest charges accrue daily on PAYE/NIC payments that are late.
Repeated failures: Consistently missing filings or payments increases HMRC scrutiny; you may receive penalty notices, warnings, or require justification (reasonable excuse required) to avoid or reduce penalties.

How Wexley & Associates Supports Employers

PAYE and RTI compliance can be deceptively complex, particularly for directors balancing multiple obligations. At Wexley & Associates, we help clients:

File RTI submissions (FPS & EPS) accurately and on time.
Avoid penalties by monitoring deadlines and ensuring payments to HMRC are made when due.
Optimise director pay (salary vs dividends) and NIC planning.
Minimise administrative burden and provide oversight so nothing slips through.

Keep Payroll Stress-Free

Payroll doesn’t have to be a headache. With the right support, directors can stay compliant, protect their business from costly penalties, and free up time to focus on growth.

Contact Wexley & Associates today for expert payroll management and tailored PAYE advice.

References

PAYE & RTI Explained: A Director’s Guide to Payroll Compliance in the UK

Understanding PAYE & RTI Compliance

PAYE: The Basics for Employers

What PAYE is: HMRC’s system for collecting Income Tax, employee NIC, student loans, and deductions from wages before payment.
Who it applies to: All employers, including limited companies paying directors.
What’s deducted: Income Tax, employee NIC, student loans, and pension contributions (if applicable via PAYE).

PAYE ensures tax and NIC are collected as earnings are paid — rather than in a lump sum at year-end.

Real Time Information (RTI): HMRC’s Reporting Standard

RTI requires employers to send HMRC payroll information “on or before” payday.

Key submissions include:

Full Payment Submission (FPS): Sent every payday, showing gross pay, deductions, NIC, and other details.
Employer Payment Summary (EPS): Used for adjustments (statutory payments like SMP/SSP, claims for Employment Allowance, and other corrections).

Missing RTI deadlines can trigger automatic penalties, even if tax/NIC payments are made on time.

PAYE & RTI Deadlines Employers Must Meet

Monthly PAYE/NIC payments: Must reach HMRC by the 22nd of the following month (if paid electronically).
Quarterly payments: Available for smaller employers whose PAYE/NIC liability per month is under £1,500.

Year-end obligations:

P60 for all employees by 31 May.
P11D & P11D(b) for benefits by 6 July.
Class 1A NIC on benefits by 22 July (if electronic submission).

Common Payroll Mistakes & Penalties

Directors often fall into traps such as:

Missing FPS or EPS filing deadlines.
Using incorrect tax codes.
Forgetting to claim or submit EPS for adjustments.
Paying PAYE/NIC late.

Penalties include:

Late reporting penalties: If you fail to send required FPS/EPS on time, HMRC charges monthly fines depending on number of employees:
• 1–9 employees: approx £100/month
• 10–49: £200/month
• 50–249: £300/month
• 250 or more: £400/month.
Late payment penalties for PAYE/NIC:
• Defaults early in the year (first one or two late payments) may incur small penalties, escalating if more defaults in same tax year.
• If payments are 30+ days late, HMRC applies a 5% penalty on the outstanding amount.
• Additional 5% penalties apply after 6 months and again after 12 months for amounts still unpaid.
Interest charges accrue daily on PAYE/NIC payments that are late.
Repeated failures: Consistently missing filings or payments increases HMRC scrutiny; you may receive penalty notices, warnings, or require justification (reasonable excuse required) to avoid or reduce penalties.

How Wexley & Associates Supports Employers

PAYE and RTI compliance can be deceptively complex, particularly for directors balancing multiple obligations. At Wexley & Associates, we help clients:

File RTI submissions (FPS & EPS) accurately and on time.
Avoid penalties by monitoring deadlines and ensuring payments to HMRC are made when due.
Optimise director pay (salary vs dividends) and NIC planning.
Minimise administrative burden and provide oversight so nothing slips through.

Keep Payroll Stress-Free

Payroll doesn’t have to be a headache. With the right support, directors can stay compliant, protect their business from costly penalties, and free up time to focus on growth.