DMBM521530 - Debt and return pursuit: PAYE: e-payment surcharge: examples of surcharge calculation

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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