SolvedDMBM521530 | Debt and return pursuit: PAYE: e-payment surcharge: examples of surcharge calculation
From HM Revenue & Customs · Debt Management and Banking Manual
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Examples of surcharge calculations
Example 1
Employer defaults twice in 2004/2005, once in 2005/2006, no defaults in year 2006/2007 and 3 times in year 2007/2008.
Surcharge would be calculated as follows
| Tax Year | Default count value (at tax year end) | Surcharge percentage (at tax year end) % | 228 net charge of £120K (£10K p/month) | 228 net charge of £600K (£50K p/month) | 228 net charge of £12M (£1M p/month) |
|---|---|---|---|---|---|
| 2004/2005 | 2 | No surcharge (0 + 0) | 0 | 0 | 0 |
| 2005/2006 | 3 (2 + 1) | 0.17 | 204 | 1020 | 204000 |
| 2006/2007 | 0 | No surcharge and surcharge period ends as no defaults in the tax year | 0 | 0 | 0 |
| 2007/2008 | 3 | 0.17 (0 + 0 + 0.17) | £204 | £1020 | £20400 |
Example 2
Employer defaults four times in 2004/2005, five times in 2005/2006, once in year 2006/2007 four times in year 2007/2008, no defaults in 2008/2009 and 3 defaults in 2009/2010.
| Tax Year | Default count value (at tax year end) | Surcharge percentage (at tax year end) % | 228 net charge of £120K (£10K p/month) | 228 net charge of £600K (£50K p/month) | 228 net charge of £12M (£1M p/month) |
|---|---|---|---|---|---|
| 2004/2005 | 4 | 0.34 (0 + 0 + 0.17 + 0.17) | £408 | £2,040 | £40,800 |
| 2005/2006 | 9 | 1. 74 (0.17 + 0.33 + 0.33 + 0.33 + 0.58) | £2,088 | £10,440 | £208,800 |
| 2006/2007 | 10 | 0.58 | £696 | £3,480 | £69,600 |
| 2007/2008 | 14 | 3.07 (0.58 + 0.83 + 0.83 + 0.83) | £3,684 | £18,420 | £368,400 |
| 2008/09 | 0 | No surcharge and surcharge period ends as no defaults in the tax year | 0 | 0 | 0 |
| 2009/10 | 3 | 0.17 (0 + 0+ 0.17 | £204 | £1,020 | £20,400 |
Example 3 - worse case
Employer defaults 12 times in 2004/2005, 12 times in 2005/2006 and continues to default on all future months for all future years.
Surcharge would be calculated as follows:
| Tax Year | Default count value (at tax year end) | Surcharge percentage (at tax year end) % | 228 net charge of £120K (£10K p/month) | 228 net charge of £600K (£50K p/month) | 228 net charge of £12M (£1M p/month) |
|---|---|---|---|---|---|
| 2004/2005 | 12 | 4.07 (0 + 0 + 0.17 + 0.17 + 0.17 + 0.33 + 0.33 + 0.33 + 0.58 + 0.58 + 0.58 + 0.83) | £4,884 | £24,420 | £488,400 |
| 2005/2006 | 24 | 9.96 (12 X 0.83) | £11,952 | £59,760 | £1,195,200 |
| 2006/2007 | 36 | All future years 9.96 as the default count continues to rise | £11,952 | £59,760 | £1,195,200 |