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Avoid Payroll Mistakes That Lead to HMRC Fines

HMRC penalties for payroll errors can reach thousands of pounds—even for small mistakes. Late filings, missed payments, and incorrect tax codes are all common traps.


Common UK payroll mistakes that lead to HMRC penalties – WorldWage Services

Here’s how to stay compliant and avoid fines in 2025.


1. Missing RTI Submission Deadlines

You must submit a Full Payment Submission (FPS) to HMRC:

  • On or before payday

  • For every employee paid—even one-off or casual workers

Penalty: £100 to £400 per month, based on number of employees.

Fix: Use a payroll service that automates RTI submissions. At WorldWage, every pay run includes instant RTI filing.


2. Paying Staff Without a PAYE Scheme

If you’re paying employees and don’t have a PAYE scheme:

  • You’re breaking the law

  • You risk fines and backdated liabilities

Penalty: HMRC may charge 100% of unpaid tax plus interest.

Fix: Register for PAYE before your first payroll. We set this up for all new clients.


3. Using the Wrong Tax Code

Wrong codes mean:

  • Employees are over- or under-taxed

  • HMRC sends correction notices

  • You deal with angry staff and extra admin

Fix: Always use HMRC’s new starter checklist or the latest P45. Update codes monthly using HMRC notices.


4. Not Assessing for Auto-Enrolment

Every employer must:

  • Assess all staff for pension eligibility

  • Enrol those who qualify

  • Submit data to a workplace pension scheme

  • Handle opt-outs and re-enrolment

Penalty: Fines start at £400 and escalate to £10,000+ depending on staff size.

Fix: Use a provider like WorldWage that includes pension admin in your payroll plan.


5. Paying Late or Incorrectly

Late salary payments or miscalculated pay:

  • Damage staff trust

  • Trigger employment disputes

  • Can result in penalties if linked to tax errors

Fix: Use software or a managed service that calculates pay, NI, and pension contributions accurately—every time.


6. No Record-Keeping

You must keep payroll records for at least 3 years. These include:

  • Pay runs

  • RTI submissions

  • Pension contributions

  • Tax code changes

  • P45s and P60s

Fix: We keep all records securely and provide access on request.


Protect Your Business From Payroll Risk

With WorldWage:

  • RTI is submitted automatically

  • PAYE, pensions, and tax codes are handled

  • Records are stored securely

  • Deadlines are never missed


Avoid fines. Stay compliant. Keep your team happy.


 
 
 

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