I'm behind on PAYE and KiwiSaver. What now?

Mr will be blunt here, kindly: of all the tax debts a business can have, PAYE and KiwiSaver arrears are the ones to fix first. Not because anyone’s a villain for falling behind — a bad month, a big customer going under, or wages simply winning the fight for cash can do it — but because the money belongs to your team, and Inland Revenue treats it that way.

What counts as employer deductions?

When you run payroll, you deduct amounts from your employees’ gross pay and pay them to IRD. Those deductions can include:

• PAYE (income tax on wages);
• KiwiSaver employee deductions and your employer contributions;
• student loan repayments;
• child support deductions;
• ESCT (employer superannuation contribution tax on your KiwiSaver contributions).

You make one payment covering all of them, by the due date.

When are they due?

Your gross annual PAYE + ESCT	How often you pay	Due
Under $500,000	Monthly	20th of the month after payday
$500,000 or more	Twice monthly	20th (for pays 1st–15th) and 5th of next month (for pays 16th–end)

For large employers, wages paid from 16 to 31 December are due on 15 January instead of the 5th. Connected businesses add their totals together to work out which group they’re in. The tax due dates tool shows your dates alongside GST and provisional tax.

Why is PAYE debt treated so seriously?

Three reasons:

1. It’s held in trust, in spirit. The tax and KiwiSaver came out of your employees’ pay packets.
2. Penalties keep running. IRD charges a 1% penalty the day after the due date and 4% more on the seventh day. Unlike GST and income tax, employer deductions also keep attracting a further 1% penalty each month they stay unpaid.
3. IRD is focused on it. In January 2026 IRD announced a campaign targeting overdue employer and GST debt, escalating from calls and messages to in-person visits, bank deductions and, for non-responders, consideration of bankruptcy or liquidation.

What should I do this week?

1. File every employment information return, even if you can’t pay yet. Filing and paying are separate obligations.
2. Pull your balance from myIR so you know exactly what’s owed.
3. Call IRD before IRD calls you. Say what happened and what you’re doing about it.
4. Pay this month’s deductions in full so the debt stops growing.
5. Decide how to clear the arrears: an instalment arrangement, a loan, or both.

Our guide IRD has called about your debt covers that first conversation.

Can a loan clear PAYE arrears?

Yes. Lenders consider it case by case, and the strongest applications show:

• every return filed and the balance confirmed;
• a clear explanation of how the arrears built up;
• current payroll obligations now being paid on time;
• trading that comfortably covers wages, deductions and the new repayment.

Smaller amounts may suit unsecured options, typically $5,000 to $500,000. Larger arrears, especially alongside GST debt, usually suit property-secured lending from $20,000 to $5,000,000, with funds paid straight to IRD at settlement. If you’d like to know which applies, ask us here.

How do I stop it happening again?

• Treat deductions as untouchable. Move them into a separate account on payday.
• Budget for the KiwiSaver increase. The default rate rose to 3.5% on 1 April 2026 and is set to reach 4% on 1 April 2028. Our guide on what the KiwiSaver increase costs employers helps you plan.
• Watch the wage-to-revenue ratio. If wages are crowding out tax, pricing or rosters need attention.
• Have a buffer for slow-paying customers, so payroll tax never becomes the thing that gives.

An illustrative example: the restaurant that caught up

This example is invented.

A restaurant in Queenstown had a quiet shoulder season while the kitchen was refitted. To keep its chefs and front-of-house team paid, the owners kept running payroll but stopped paying employer deductions for three months. Employment information was still filed through their payroll software, so IRD knew exactly what was owed. Then IRD called.

What the owners did:

1. Confirmed the balance in myIR, including penalties.
2. Called IRD back the same day, explained the refit and the quiet season, and said they were arranging finance.
3. Paid the current month’s deductions in full, so the debt stopped growing.
4. Applied for a property-secured loan against a rental they owned, with the PAYE arrears paid directly to IRD at settlement.
5. Changed their routine — deductions now move to a separate account on every payday.

Because returns were filed and the cause was clear, the lender’s main questions were about the coming winter season’s bookings and how repayments would be met. The restaurant came through with its team intact and its IRD account clear.

How the KiwiSaver rate rise changes payroll budgets

The default KiwiSaver contribution rate rose from 3% to 3.5% on 1 April 2026 for both employees and employers, and is set to rise again to 4% from 1 April 2028. For an employer, that’s a higher contribution on every eligible employee’s gross pay, plus ESCT on top.

Practical steps:

• update payroll settings and check them against your provider’s notes;
• re-run your wage budget for the year with the new rate;
• remember that employees on the default rate will also see a larger deduction from their pay;
• build the 2028 step into any long-term plans now.

Ask Mr about catching up

Being behind on employer deductions is stressful, and the sooner it’s sorted the better you’ll sleep. Tell us how much is owed, what kind, and whether returns are filed. There’s no credit check to ask, nobody else sees your enquiry, and a real person will ring you to work through it.

Please be precise about the PAYE and KiwiSaver balance and any GST alongside it on the form — it lets us find an option that clears it properly the first time. Get help funding your PAYE catch-up.