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HMRC have announced that there is currently a delay in issuing a cheque for 2006-07 PAYE tax-free payments.

Employers have been able to file certain PAYE forms and returns voluntarily via the internet for some years. Electronic filing of PAYE returns will, however, be compulsory for all employers by 2011. To encourage employers to switch to electronic filing sooner rather than later, HMRC have been offering financial incentives annually since 2004-05.

The 2006-07 tax free payment of £150 is awarded to employers, with less than 50 employees, who filed their employer’s annual return (P35) online. Employers who have been awarded the tax-free payment can apply for a cheque payment.

However due to the large number of claims for a cheque payment, it is taking HMRC longer than anticipated to deal with them. As a result, it may take until December before everyone receives their cheque.

HMRC are unable to make a cheque payment where an employer has any PAYE returns outstanding. Any amounts of PAYE outstanding must also be cleared before HMRC will issue a cheque payment for any balance remaining.

HMRC have apologised for the delay and wish to assure employers that they do have all claims in hand - there is no need to contact them again.