Online filing

1.1 Online filing explained

'Online filing' means sending your Employer's Annual Return (P14s and P35) to us electronically direct to our computer, cutting out paper or other ways of sending us your Return.

1.2 The benefits of doing it online

In 2005, employers and agents sent two million in-year forms and almost one million Employer's Annual Returns online.

Sending or receiving information online is secure and convenient. It is more reliable and efficient than using paper, and can cut down on storage space, post and administration. And because information mostly passes between computers without manual intervention, there is less chance of it being misinterpreted, or of mistakes being made.

You can send more than your Employer's Annual Return to us online. You can, for example, send P11Ds (Returns of expenses and benefits) and P46s (notices of new employees) online, as well as receiving tax coding notices.

Doing it online can benefit employees, too. It means employees can get the right tax code more quickly. And pension and benefit records are updated faster at the end of the tax year if you send us details online.

Our 'Business Support Teams' can help you if you want to do more business with us online.

1.3 Register for our online services now!

You must register with us if you want to use our online services. When you have registered you will get a User ID and Activation PIN in the post within seven days. You then have 28 days to activate your account. Register in plenty of time to avoid a last minute rush to meet, or avoid missing, the Return filing deadline.

As soon as you have activated your account you can start using our online services to send and receive information, and we will start to send you tax coding notices and reminders online (for example, forms P6 and P9).

1.4 Review of HM Revenue & Customs' online services

The Government announced in July 2005 that businessman, Lord Patrick Carter, was going to lead a review to look at how HM Revenue & Customs' online services can further benefit customers.

His remit was to advise on how to increase employers' use of online services, including Self Assessment, VAT and Corporation Tax. He was also asked to look at how the Department can provide benefits for customers and ensure that online services run efficiently.

Lord Carter previously led a Review of Payroll Services in 2001. One of the recommendations he made in that Review was that online filing should be compulsory for large and medium-sized employers.

1.5 Review recommends investment and expansion in online services

The Government has announced that it is accepting the recommendations of Lord Carter's Review of HM Revenue & Customs’ Online Services, published on 22 March 2006.

Lord Carter recommended that the Government respond to the needs of business with a package of robust, high-capacity online filing services. He also recommended an expansion in online filing of Returns, which will benefit businesses and taxpayers.

Lord Carter also recommended:

  • that large and medium-sized employers (50 or more employees) should be required to file their PAYE in-year forms online from April 2008
  • that small employers (fewer than 50 employees) should be required to file their PAYE in-year forms online from 2010.

These recommendations build on the measures from his previous Review of Payroll Services which will require all employers to file their Employer's Annual Returns online by 2010.

HM Revenue & Customs will work closely with others - including employers, agents and software developers - on the implementation of the new measures. And, in line with Lord Carter's recommendations, will only implement the new measures when the IT systems that will allow efficient online filing are in place and are fully tested.

1.6 The online filing deadlines

If you are a large employer (250 or more employees), you must file your Employer’s Annual Return online.

If you are a medium-sized employer (between 50 and 249 employees), you must start by filing your 2005-06 Employer’s Annual Return online by 19 May 2006.

If you are a small employer (fewer than 50 employees) you do not have to start filing online until at least 19 May 2010. But you can get tax-free payments from us if you file online before then.

1.7 Tax-free payments for small employers

If you are a small employer, you will get tax-free 'incentive' payments if you file your Employer's Annual Return online. If you were one of the majority of employers who filed online for 2004-05, you will have qualified for £250. Do not miss out on these tax-free payments:

  • file online for 2005-06 (Return due by 19 May 2006) and get £250
  • file online for 2006-07 (Return due by 19 May 2007) and get £150
  • file online for 2007-08 (Return due by 19 May 2008) and get £100
  • file online for 2008-09 (Return due by 19 May 2009) and get £ 75

You will not qualify for a tax-free payment if you send us an unnecessary Return. (See 'If you do not have to make a Return' and 'Sending in a P35 with no financial entries, but with P14s', and 'Legislation'.) To qualify:

You will get a tax-free payment whether you file online or an agent or payroll bureau files online for you. If you want the payment to go to your payroll agent you must let us know in writing.

You will get the tax-free payment after you successfully file your Return online.

You will qualify even if you file your Return after 19 May (the date by which it should reach us). But you could be liable for a late filing penalty if your Return is late.

You will not qualify for the tax-free payment if any part of your Return is sent to us on paper or using magnetic media.

The tax-free payment is only tax-free to employers.