Brian Redford, Deputy Director Intermediaries and External Communication, Business Customer Unit, HM Revenue & Customs (HMRC) outlines key changes to PAYE filing and urges employers to get ready for them.

Introduction

PAYE is changing this spring, so if you are an employer you need to be aware of the changes and prepare for them.

Online Filing is Required in Almost All Cases

By 19 May, all employers, including those with fewer than 50 staff, must file their Employer Annual Return (P35 and P14s) online. So we no longer expect those employers who must file online to order any paper P14s from us either. We will, of course, keep limited stocks available at the Employer Orderline for those that really need them. And we will continue to provide paper P60s. But we are asking employers and agents alike to consider their stationery orders carefully before they contact us.

Employers who file their return on paper - even if it’s before 19 May - could receive a penalty. These range from £100 to £3,000, depending on the number of people a company employs.

Exceptions to the Online Filing Rule

There are some very limited exceptions to this rule. The main employer group that is exempt is people with disabilities who employ their own carer. They will still be able to file on paper, subject to certain conditions, but they need to check with us before they do. But virtually everyone else will have to file online.

Filing online is easy, but first you need to register by going to PAYE for Employers and selecting “Register for PAYE online” in the right-hand column. Once you have registered, you will be sent a Personal Identification Number (PIN) allowing you to file online. It can take a week to receive your PIN, so it’s important not to leave it until the last minute. If your Employer Annual Return is ready, you can go online and file it straightaway.

I’m a Small Employer, Filing my Employer Annual Return Online for the First Time. What Help is Available to Me?

If you have fewer than 50 employees, you can file your Employer Annual Return securely online using HMRC’s ‘Online Return and Forms – PAYE software’. To help you get your return right first time, HMRC has published a list of common mistakes to avoid on our website at Avoiding and Correcting Errors in Your Employer Annual Return (P35 and P14s). We also provide a facility to send test returns. If you need further help, we provide detailed advice and guidance on our website at File Your Employer Annual Return Online: P35 and P14s, alternatively contact our Employers Helpline on 08457 143 143. Our Employer CD-ROM, which HMRC sends to all employers every February, also provides useful advice.

New Penalties Come In This Spring

From April 2010, we are introducing new penalties for late payment of PAYE – including Income Tax, National Insurance Contributions (NICs), Construction Industry Scheme (CIS) deductions and Student Loan deductions.

The changes mean that, from May 2010, if you’re an employer (or if you’re a contractor under CIS), you may have to pay a penalty if you don’t make PAYE payments on time and in full.

The amount of the penalty you will have to pay will depend on whether payment is due on a monthly, quarterly or annual basis. For more details see PAYE - Penalties for Late Payment - Frequently Asked Questions.

If you are worried about remembering the deadline you can visit the business link website at Tax Deadline email Alerts and set up email alerts or you may want to consider changing you payment method – possibly to direct debit. For information about the different payment methods please go to How to Pay PAYE/Class 1 National Insurance Contributions.

And remember - these penalties only affect late payers so no-one else need worry.

Businesses experiencing temporary financial difficulties should ring HMRC’s Business Payment Support Service – if possible, before the payment is due. The number to call is 0845 302 1435. Where employers contact us before the payment is due, and we agree extra time to pay, we won’t charge penalties for amounts covered by that agreement – providing they stick to the agreed terms.

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