What Are the Penalties for Missing a Payroll Submission Deadline?

Late payroll submissions can lead to HMRC fines and interest charges. Find out how penalties work, what counts as a reasonable excuse, and how to avoid future delays.

Introduction

Submitting payroll information to HMRC on time is a key responsibility for any employer. Under the Real Time Information (RTI) system, you must report employees’ pay and deductions on or before each payday. Failing to meet these deadlines can result in penalties, interest charges, and unwanted attention from HMRC.

Even small charities and businesses are subject to these rules. Missing a submission occasionally might not cause immediate fines, but repeated late filings can trigger penalties. This article explains what happens if you miss a payroll submission deadline, how HMRC calculates fines, and what you can do to stay compliant.

Understanding RTI Submissions

Real Time Information (RTI) was introduced to make payroll reporting more accurate and efficient. It requires employers to report payments and deductions every time they pay staff, rather than just once a year.

The key reports are:

  • Full Payment Submission (FPS): Sent on or before each payday, detailing what you paid each employee and the deductions made.

  • Employer Payment Summary (EPS): Sent if you have no payments to report or to claim statutory payments or employment allowances.

Submitting these reports on time ensures HMRC has an accurate record of your PAYE, National Insurance, and other deductions.

What Happens If You Miss the Deadline

If you submit your FPS after payday, HMRC records it as late. The consequences depend on how often it happens and the size of your organisation.

In most cases:

  • HMRC sends an automatic late filing notice through your PAYE online account.

  • You may receive a penalty notice if the delay is not justified.

  • Repeated late submissions can lead to cumulative fines and interest charges.

If you realise you have missed a submission, file it as soon as possible. HMRC prefers prompt correction rather than ongoing delay.

HMRC’s Penalty Structure for Late Payroll Submissions

HMRC calculates penalties based on how many employees you have and how often you file late.

  • 1 to 9 employees: £100 per month

  • 10 to 49 employees: £200 per month

  • 50 to 249 employees: £300 per month

  • 250 or more employees: £400 per month

These penalties apply for each month in which at least one RTI submission is late. The fine is not charged per submission but per month, regardless of how many reports are overdue.

If you file late multiple months in a row, the penalties add up quickly. HMRC also charges interest on late PAYE payments, so it is important to keep both reporting and payments on schedule.

First-Time Late Submission

If you miss a payroll submission for the first time in a tax year, HMRC usually issues a warning instead of an immediate fine. This gives you a chance to correct your processes before facing penalties.

However, repeated delays after the warning can result in fines for every subsequent late submission.

How HMRC Determines Penalties

HMRC looks at several factors when deciding whether to apply or waive a penalty:

  • Whether the submission was late due to a genuine mistake or technical issue

  • How quickly you corrected the error

  • Your history of compliance with RTI rules

  • Whether you informed HMRC about the issue proactively

If you have a good track record and can demonstrate a valid reason, HMRC may reduce or cancel the penalty.

Reasonable Excuses for Late Submission

HMRC recognises that sometimes circumstances beyond your control can cause delays. Valid excuses include:

  • System failures or software errors that prevented submission

  • Serious illness or bereavement affecting the person responsible

  • Fire, flood, or other unexpected disaster

  • Technical issues with HMRC’s online services

If any of these apply, submit your report as soon as possible and include an explanation when you file. HMRC will review your case and decide whether to cancel the fine.

When Payment Deadlines Are Missed

Late RTI submissions and late PAYE payments are different, but they often go hand in hand. If you miss payment deadlines as well as submissions, HMRC can charge:

  • Interest on the late payment from the due date until it is paid

  • Late payment penalties for repeated missed deadlines

Employers must pay PAYE and National Insurance by the 22nd of the month (or the 19th if paying by post).

Example Scenario

Imagine a small charity, Hope for All, pays its staff every Friday but forgets to send the FPS on one payday. The treasurer realises two days later and files the report immediately.

Because it is the first time this tax year, HMRC sends a warning but no fine. However, if the charity repeats the mistake in the following months, it could face a £100 penalty per month until the issue is resolved.

This example shows that while HMRC can be lenient for genuine one-off errors, consistent lateness leads to financial consequences.

How to Avoid Late Payroll Submissions

  1. Set reminders: Schedule payroll deadlines in your calendar to ensure reports are sent on time.

  2. Use reliable payroll software: Modern systems automatically send RTI submissions when payroll is processed.

  3. Check HMRC receipts: Always confirm that your submission has been received successfully.

  4. Plan around holidays: Submit payroll early if payday falls on a bank holiday or weekend.

  5. Train staff: Ensure whoever manages payroll understands RTI rules and submission deadlines.

  6. Work with an accountant: An accountant can handle payroll and submissions for you, ensuring complete compliance.

Appealing a Penalty

If you receive a penalty notice you believe is unfair, you can appeal within 30 days of receiving it. You must provide a valid reason, such as a technical fault, illness, or other exceptional circumstance.

HMRC reviews each appeal individually. If accepted, they may cancel or reduce the fine.

The Role of an Accountant

An accountant or payroll professional can help prevent late submissions by:

  • Setting up payroll software correctly

  • Ensuring RTI submissions are automated and accurate

  • Monitoring deadlines and confirming HMRC receipt

  • Handling PAYE payments and end-of-year reporting

  • Managing communication with HMRC if issues arise

Professional support saves time, reduces stress, and eliminates the risk of avoidable penalties.

Conclusion

Missing a payroll submission deadline can lead to penalties from HMRC, especially if it happens repeatedly. The fines depend on the size of your workforce and can quickly accumulate if not addressed.

To stay compliant, always submit RTI reports on or before payday, keep accurate records, and use payroll software to automate submissions. If you do encounter problems, act quickly, contact HMRC, and keep them informed. With careful planning and professional advice, you can avoid penalties and ensure your payroll runs smoothly.