Company PAYE and NIC arrears
PAYE and National Insurance arrears arise when a company deducts tax and National Insurance from employees' wages but does not pay it over to HMRC, using the money for cash flow instead. HMRC views this seriously because, like VAT, the money was never really the company's to spend, and unlike most company tax debts it carries some personal risk for directors. HMRC, gov.uk
- What it is
- Tax and NIC deducted from wages but not paid to HMRC
- Personal risk
- Personal Liability Notices possible for some unpaid NIC
- First step
- File RTI on time, contact HMRC early
- Signal
- PAYE arrears from an unaffordable wage bill needs advice
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The personal-liability angle
Unlike most company debts, certain unpaid National Insurance can be pursued from a director personally through a Personal Liability Notice where there is neglect or fraud. That makes early action on PAYE arrears especially important. See HMRC debt for the wider picture.
What to do now
As with all tax arrears, the safe response is to file Real Time Information on time, contact HMRC early, and propose a realistic Time to Pay arrangement. If PAYE arrears are building because the company simply cannot afford its wage bill, that is a sign the business may need formal rescue or closure, and advice should be taken without delay.
Related data
Our HMRC tax debt figures: The scale of tax debt owed to HMRC, PAYE included, from the National Audit Office. Every page on our data hub names its official source.
Common questions
Can I be made personally liable for unpaid PAYE?
PAYE itself is generally a company debt, but HMRC can issue a Personal Liability Notice for some unpaid National Insurance where a director has been neglectful or fraudulent. Take advice if you are worried.