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HM Revenue & Customs (HMRC) has issued an alert to employers about key PAYE changes coming in this spring.

The changes affect Employer Annual Returns and starter and leaver PAYE forms:

•  From April, employers with fewer than 50 employees must now send starter and leaver forms – P45s, P46s and similar pension information – online to HMRC.
• All employers who send their Employer Annual Return to HMRC after the 19 May filing deadline will now receive a late-filing penalty. Previously, an Extra-Statutory Concession gave employers extra time before HMRC charged a penalty, but this has been withdrawn.
• From this year, employers will be liable to a penalty if they file their annual return on paper. Last year, no penalty was charged for employers with five or fewer employees. But these transitional arrangements have now ended.

HMRC will also be issuing PAYE penalties this spring for the first time in two key areas:

• Penalty notices will be sent out in April to employers with 50 or more employees who have not filed starter and leaver forms online to HMRC. The first penalties will apply for the three month period to 5 April 2011, with further penalties being issued on a quarterly basis.
• From May this year, HMRC will start sending out penalties for late payment of PAYE. Employers will be liable for a penalty if they haven’t made PAYE payments on time, and in full, from April 2010. The amount of the penalty will depend on the amounts paid late and the total number of late payments made. Penalties will be charged after the tax year-end.

Further information is available on the changes from the HMRC website at PAYE for Employers or via its Employers Helpline on 08457 143 143.

For help and advice on paying HMRC visit Paying HMRC.

Further Notes

1. Employers must file an Employer Annual Return (EAR) – a P14 for each employee and a P35 summary sheet – by 19 May. They must do this online (with some very limited exceptions, for example, people who employ their own carer and those with religious objections).
2. If an employer has not previously sent their return online, they must act now by registering for HMRC’s online service. More information on filing online and registration can be found at Understanding and Using PAYE Online for Employers.
3. To help employers get their return right first time, HMRC has published a list of common errors to avoid on its website at Avoiding and Correcting Errors in Your Employers' Annual Returns (P35 and P14s).
4. There are a number of ways that employers can send employee starter and leaver details online. They can use commercial software, HMRC’s free Online Return and Forms – PAYE Service, HMRC’s Basic PAYE Tools (formerly Employer CD-ROM) or an agent can do it for them online.
5. To avoid unnecessary administration work for employers and HMRC, employers should not send paper starter and leaver forms to HMRC where they have already filed online or intend to do so.