Once you're running a payroll, you've got a monthly PAYE liability to pay to HMRC, that's your PAYE, National Insurance, student loan deductions, and apprenticeship levy all rolled into one figure (your P32 total).

By default, you'd need to make that payment manually every month. But there's a better way.

HMRC lets you set up a Variable Direct Debit, which means they collect the exact amount you owe automatically each month, based on what your payroll software submits. Set it up once and you're done.

Here's how to do it.‍

Before you start, you'll need:

• Your Government Gateway user ID and password
• Your Employer PAYE reference (e.g. 123/AB45678 — found on letters from HMRC)
• Your Accounts Office reference (a 13-character number, e.g. 123PA00012345)
• Your UK bank account details — sort code, account number, and account name

You must be the account holder (or be authorised to set up Direct Debits on the account).

How to set up your PAYE Direct Debit

Step 1: Go to https://www.gov.uk/log-in-register-hmrc-online-services and sign in with your Government Gateway credentials. Complete the two-step verification when prompted.

Step 2: From your Business Tax Account homepage, find the PAYE for Employers tile and click into it.

Step 3: Click View your account or Make a payment. You'll see a screen showing your outstanding PAYE liabilities and payment history.

Step 4: Look for the 'Set up a Direct Debit' link on that screen and click it. HMRC will explain how the Variable Direct Debit works, then ask you to enter your bank account details — account holder name, sort code, and account number. Tick the confirmation box, review the Direct Debit Guarantee, and click Confirm and continue.

Step 5: You'll see a confirmation screen. HMRC will email you and your bank will also write to confirm the Direct Debit is active.

That's it. The 'Set up a Direct Debit' link will now show as 'Manage your Direct Debit' — use that in future if you ever need to amend or cancel.

When will payments be taken?

HMRC collects the Direct Debit on the 23rd of each month (or the next working day if that falls on a weekend or bank holiday), based on the figures from your Full Payment Submission (FPS) and any Employer Payment Summary (EPS) submitted by the 19th.

So for example, your November P32 will be collected on 23rd December.

Allow at least 10 working days for the Direct Debit to become active before your first payment date.

A few important things to know

• The Direct Debit is variable — HMRC takes the exact amount you owe each month, so the figure will change depending on your payroll
• Make sure funds are in the account by the 23rd — a bounced Direct Debit can trigger interest and penalties
• Submit your payroll on time — late FPS or EPS submissions can mean HMRC collects the wrong figure
• You can cancel at any time via 'Manage your Direct Debit' in your Business Tax Account, or directly with your bank

If you get stuck at any point, get in touch with us at Layers and we'll help you get it sorted.