As we approach the P11D deadline for tax year 2021/22, the deadline to pay Class 1A looms closer.

These are:

  • Tuesday 19 July 2022 or
  • As cleared funds in HM Revenue and Customs (HMRC) account by Friday 22 July 2022 if making the payment electronically

There are two important considerations:

The Payment Reference Number

With the payment, a 17-character reference number should be quoted to accompany the payment. This reference is a mutation of the usual Accounts Office reference number used and is comprised of the first 13 characters of the Accounts Office reference number and a 4-character tax year identifier suffix. This will identify to HMRC the PAYE reference for the employer and the fact that it is a payment of Class 1A, not to be confused with a normal monthly remittance. The 4-character suffix can be checked using HMRC’s reference checker tool and is as follows:

 

  • 2 characters indicating the calendar year in which the tax year finished, i.e. 22 for 2021/22 tax year
  • The characters 13 indicating a payment of Class 1A NICs

Table 1

For example, if the 13-character PAYE reference is 123 PA 00072345 the Class 1A payment reference number will be 123 PA 00072345 2213.

Using the correct payment reference number will avoid any chance of HMRC’s systems misallocating the payment and, therefore, prevent any late payment and interest charges.

Making the Payment

HMRC will accept payment in one of two ways:

1. Post, or

2. Electronically

HMRC’s guidance on Gov.UK details the payment methods and whether the 17-character reference is required:

Table 2

For example, if the 13-character PAYE reference is 123 PA 00072345 the Class 1A payment reference number will be 123 PA 00072345 2213.

Using the correct payment reference number will avoid any chance of HMRC’s systems misallocating the payment and, therefore, prevent any late payment and interest charges.

Making the Payment

 

HMRC will accept payment in one of two ways:

1. Post, or

2. Electronically

HMRC’s guidance on Gov.UK details the payment methods and whether the17-character reference is required:

 

Post

HMRC’s preferred payment method is electronic. However, payment by post is a valid payment method. Employers should allow 3 working days for the payment to reach HMRC.

If the employer does not have a payslip, one should be printed which will automatically populate the 17-character reference once all of the information is entered.

Cheques must be made payable to ‘HM Revenue and Customs only’ followed by the 17-character reference (though Gov.UK guidance indicates that this reference should be on the

back of the cheque). The cheque and Class 1A payslip must be unfolded, not fastened together and posted to: 

HMRC Direct BX5 5BD

A receipt can be requested by including ‘a note’ with the cheque and payslip.

 

Electronic

There are various electronic ways to pay HMRC and it is worthwhile noting that the time for the funds to reach HMRC varies depending on the method chosen:

  • Same or next day
  • 3 working days, or
  • 5 working days

 

Paying online

HMRC have an online tool that will allow payment by signing into the employer tax account. Although, payment can also be made without signing in.

The tool can accommodate the following payment methods:

However, there are other ways to pay, all of which are detailed on Gov.UK.

 

Faster Payments

Employers can pay using the following details:

Table 3

The 17-character reference is required and payment by this method is usually received on the same or next day.

 

CHAPS or BACS

Employers can pay by CHAPS or BACS using the following details:

Table 4

The 17-character reference is required. CHAPS payments are usually the same working day if they are made within the initiating bank’s processing schedule. BACS payments usually take 3 working days to credit HMRC‘s account.

Bank / Building Society

Payments can be made at a bank or building society by cash or cheque, with cheques made payable to ‘HM Revenue and Customs only’. The 17-character reference should be written in the reverse of the cheque. Employers must use the Class 1A payslip.

This payment method takes up to 3 days to reach HMRC’s account.

Overseas Account

Employers can pay from an overseas account using the following details:

Table 5

HMRC’s banking address is:

Barclays Bank PLC 1 Churchill Place London United Kingdom E14 5HP

There is no information about including the 17-character reference is required, though this should be added if possible. Employers should check how long the payment will take to reach HMRC, as this may vary depending on the country where the payment is initiated.

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