Finishing the tax year up to 5 April 2008

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Contents

Part 1

Part 2 - what you'll need

Part 3 - finishing off form P11, Deductions Working Sheet

Part 4 - filling in the form P14, End of Year Summary, for tax year 2007-08

Part 5 - filling in the form P35, Employer Annual Return, for tax year 2007-08

Part 6

Part 7

Part 8

Part 9

Help and further guidance

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Finishing the tax year up to 5 April 2008

This Helpbook tells you:

  • how to complete your Employer Annual Return and other forms to finish the tax year 2007-08.
  • the latest dates for making any outstanding payments of Pay As You Earn (PAYE) and National Insurance contributions (NICs) including Class 1A
  • the dates by which you need to file your 2007-08 Employer Annual Return
  • what to do if you want to file your Employer Annual Return online and where you can find more information
  • how to get a £100 tax-free payment if you file your 2007-08 Employer Annual Return online

Do it online in April 2008

If you have 50 or more employees you must file your 2007-08 Employer Annual Return (P14s and P35) online or face a penalty. But you can get £100 tax-free if you have fewer than 50 employees and file online.

You can file your Return online using:

  • Internet - you can choose either:
    • our free Online Return and Forms - PAYE product (recommended for up to 50 employees), or
    • third party payroll software
  • Electronic Data Interchange (EDI) - this option is more suitable for larger employers with a high number of employees, typically in the thousands.
  • Alternatively, an agent or payroll bureau can file online on your behalf using our PAYE Online for Agents service.

See PAYE Online for more information.

Part 1 - important dates for finishing the tax year 2007-08

19 April 2008

If you are not subject to the mandatory electronic payment rules and you post your payment, please pay all outstanding tax and NIC so your payment reaches us no later than 19 April to avoid being charged interest.

Interest will be charged on any payments received after this date.

22 April 2008

Last date for any outstanding 2007-08 PAYE and Class 1 NICs payments to be cleared in our bank account if you pay by an approved electronic payment method.

Interest will be charged on any payments received after this date (and surcharge in the case of employers who are subject to the mandatory electronic payment rules).

19 May 2008

Last date for your 2007-08 forms P14, or substitutes, and P35 to reach your HM Revenue & Customs (HMRC) office. You have until midnight on the 19th to file your Return.

Penalties are chargeable on any Returns received after this date.

31 May 2008

Last date for giving a 2007-08 form P60 to each employee who was working for you at 5 April 2008.

6 July 2008

Last date for:

  • your 2007-08 forms P9D and forms P11D, or substitutes, to reach your HMRC office
  • any Return of Class 1A NICs on form P11D(b) for 2007-08 to reach your HMRC office – penalties will be charged automatically on any

Returns not received by 19 July 2008:

  • giving a copy of the 2007-08 form P9D, P11D, or equivalent information, to each relevant employee.

19 July 2008

If you are not paying by an approved electronic payment method and you post your payment, please pay all
outstanding Class 1A NICs so your payment reaches us no later than 19 July to avoid being charged interest.

Interest will be charged on any payments received after this date.

22 July 2008

Last date for any outstanding 2007-08 Class 1A NICs payments to be cleared in our bank account if you pay by an
approved electronic payment method.

Interest will be charged on any payments received after this date.

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Quality checks

If you are filing your Employer Annual Return (P14s and P35) online you should find that these quality checks are built into your payroll software or carried out by your payroll bureau or agent. If you are unsure we recommend that you confirm this with your software provider, payroll bureau or agent before filing your Return.

An Employer Annual Return (P14s and P35) sent on paper will be rejected if:

  • the stationery used has not been approved by HMRC
  • the form P35 is not signed
  • the form P35 has not been fully completed
  • you have not enclosed the form P35
  • the forms P14 are not the correct version for the year
  • you have not enclosed forms P14 with the form P35
  • you have not sent us a form P14 for everyone listed on the form P35
  • the forms P14 do not have a valid entry in either the National Insurance number box or the date of birth and gender boxes
  • the forms P14 do not all have an entry in the employee name box
  • the National Insurance contribution boxes on the forms P14 are not fully completed
  • the forms P14 do not all have an entry in the pay box
  • the entries on forms P14 are unclear, for example:
    • the entries made are faint
    • because they are not displayed within the white boxes
    • due to carbon smudges
    • the font size of the print is too small
    • the forms have been hole punched where there is relevant information
    • the forms have been damaged
  • the forms P14 have not been split correctly
  • the forms P14 are attached together with either glue or staples
  • sticky labels or correcting fluid have been used on forms P14
  • the sprockets have not been taken off the forms P14.

All Returns must pass our quality checks. If you file your Return online you will get a message telling you if your Return has failed and why. You must put right any errors and resubmit your Return by 19 May 2008 to avoid the late filing penalty.

Returns sent on paper or magnetic media will be returned to you for correction if they fail these initial quality checks. You must put right any errors and resubmit your return by 19 May 2008 to avoid the late filing penalty.

Paper and magnetic media Returns will be checked in more detail after 19 May 2008. We will contact you then if your Return does not meet these detailed checks.

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Part 2 - what you'll need

5 April 2008

At 5 April 2008, the end of the 2007-08 tax year, you must file an Employer Annual Return (P14s and P35), if you have had to maintain a P11 Deductions Working Sheet or equivalent record for at least one employee during 2007-08, even if you did not deduct National Insurance or tax.

You may submit an Employer Annual Return (P35) if you are a Limited Company and the only item that you need to report on the P35 is an amount in the 'CIS deductions suffered' box (box number 28).

You can let us know that a Return is not due by telephoning or writing to your local HMRC office.

To complete your Return you will need:

  • all the forms P11(2007-08), Deductions Working Sheets or equivalent record, which you filled in for your employees for the year ended 5 April 2008, including those who left during the year
  • a form P14, End of Year Summary or substitute, for each completed form P11(2007-08) Deductions Working Sheet or equivalent records.

Note - Please make sure that you only use the 2007-08 version of form P14

Contact the Employer Orderline as soon as possible to order a supply of the new forms:

  • A form P38(S), Student's declaration
    • advising the amount of pay a student has earned whilst employed by you during the holidays
    • order these from the Employer Orderline.
  • A form P38A, Employer Supplementary Return
    • This form asks for details about payments made to people who worked for you during the year to 5 April 2008 but for whom you did not complete form P14 or form P38(S)
    • Paper forms P38A are issued with your form P35 by the end of March 2008
    • If you previously filed online over the internet, and are currently registered to do so, then you will not receive a paper form P38A. You can file a P38A online, print off copies from your Employer CD-ROM or order some from the Employer Orderline.
  • A form P35, Employer Annual Return
    • If you previously filed online over the internet, and are currently registered to do so, then you will not receive a paper form. Instead a P35N (Notification to File) will be made available to view from your PAYE Online service page using the 'view employer notices' option
    • Decide if you are going to use third party software or use the free Online Return and Forms - PAYE product to file online. You can see a list of software that you can use to send your return over the internet.
    • Paper P35s are issued by your Accounts Office. You will be sent a paper P35 if you have fewer than 50 employees and you did not file online for 2006-07, or your P35 was filed online by an agent for whom you have not authorised us to send communications on your behalf. Contact your HMRC office if you have not received yours by the end of March 2008 and you are not going to file online. If you have 50 or more employees you must file online. You will not be sent a paper P35.
    • You must only send one P35 for a single PAYE reference. We will not consolidate the details sent on more than one P35 for a single PAYE reference
    • do not send a paper P35 as well as an online return
  • A form P60, Employee's Certificate of Pay, Income Tax and NICs
    • form P60 is the third part of paper P14 set, or you can use an approved substitute
  • A form P9D, Expenses payments and income from which tax cannot be deducted 2007-08 and/or a form P11D, Expenses and Benefits 2007-08
    • (One for each relevant employee) if you have paid expenses payments to any employees or you have provided them with benefits
    • Print these off from your Employer CD-ROM or order them from the Employer Orderline.
  • A form P11D(b), Return of Class 1A National Insurance contributions, Return of expenses and benefits: Employer declaration
    • You should complete and sign this form if you are liable to Return any expenses payments or benefits on form P11D. We will send the form to you in April if you made a Return on form P11D last year. But if you are reporting expenses payments and benefits for the first time, ask your HMRC office for this form.

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PAYE Online for Employers

If you have 50 or more employees you must file online.

If you want to file all or part of your Employer Annual Return online, or you want to use other functions within our PAYE Online service, you must register for PAYE Online for Employers. You can register by visiting PAYE Online for Employers and follow the step by step guidance.

To register and enrol you will need your 'Employer PAYE reference' and 'Accounts Office reference' which you can find on the front of your P35. You will create your own password and within seven days you will get a User Identity (User ID) which will be displayed on screen. Keep your User ID and password safe, you will need them every time you use our online services.

Within seven days of completing the on screen registration and enrolment process we will confirm your User ID by post and send a separate letter showing your Activation PIN. You must activate the service within 28 days of enrolment. To activate, visit PAYE for Employers. Enter your User ID and password. You will be asked to enter your Activation PIN on screen the first time you login. Once the service has been activated you can destroy the Activation PIN as you will not need it again.

Remember: Do not leave registration until the last minute (for example, just before your online filing deadline). You need to make sure that you have registered and activated your service in time to file your Return by 19 May 2008.

There is a wide range of end of year and in-year forms and Returns that you can send online, for example:

  • P38A, Employer Supplementary Return
  • P11D, Return of expenses payments and benefits
  • P11D(b), Return of Class 1A National Insurance contributions, Return of expenses and benefits: Employer declaration.
  • P9D, Return of expenses payments and income from which tax cannot be deducted (internet only)
  • P45(1) employee leaving details
  • P45(3) new employee
  • P46 new employee who does not have a P45

Getting ready for in-year filing online

From 6 April 2009, if you have 50 or more employees, you will have to send HMRC details of any employees starting or leaving employment with you and some pension information, online. All employers must send this information online from April 2011. For more information about sending in-year information online, visit the Doing PAYE online all year round page.

Using Online Return & Forms - PAYE

You will need software to file forms and Returns online. A range of internet filing enabled software and online forms are available from third party suppliers, or you can use our free Online Return & Forms PAYE product.

You can also file:

To use Online Return and Forms - PAYE:

To file your Return:

  • first enter employer details
  • create an online list of your employees
  • complete your P14s
  • complete your online form P35
  • send your Return online to HMRC.

Using the calculator on your CD-ROM

If you have used the P11 Calculator for all your employees in 2007-08, and at 5 April 2008 you were using the calculator for 9 or less employees, you can send us your Employer Annual Return (P14s and P35) online straight from your CD-ROM - see the ‘Online Services’ section of the CD-ROM.

Further information for online filing

For more information about sending and receiving forms and Returns online:

Note: If you intend filing your Return online you must not send paper forms P35 and P14s.

If we do receive a paper Return before we receive your online one, we will treat the paper Return as the first one we received. That means you will miss out on the £100 tax-free payment if you have fewer than 50 employees, or
you will be charged a penalty for not filing online if you have more than 50 employees.

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Part 3 - finishing off form P11, Deductions Working Sheet

Example of the back of a completed form P11 for year ending 5 April 2008 (PDF 52K).

You will have been filling in the P11 or equivalent record, week by week, month by month during the year. To complete the end of year procedures you now need to fill in the totals boxes on the P11, Columns 1a - 1e (National Insurance contributions).

Columns 1a - 1e (National Insurance contributions)

Add up each of the entries in each of columns 1a, 1b, 1c, 1d and 1e, and enter the total for each in the corresponding column of the End of Year Summary section next to the contribution Table letter ready for transfer on to the form P14, End of Year Summary.

Please remember:

  • if you have used the exact percentage method to calculate NICs, round down the annual total of the earnings recorded in columns 1b and 1c to the nearest whole pound
  • when completing column 1d, follow steps (1) to (4) . If more than one contribution Table letter has been used during this employment, these steps should be applied to each Table letter separately
    • (1) Add all amounts of NICs not marked 'R'
    • (2) Add all amounts of NICs marked 'R'
    • (3) Take away (2) from (1)
    • (4) Enter (3) in column 1d of the End of Year Summary section - if this is a minus amount mark the entry as 'R'.

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Scheme Contracted-out number

If your employee is in your Contracted-out Money Purchase (COMP) scheme, COMP Stakeholder Pension (COMPSHP) scheme or the COMP part of your Contracted-out Mixed Benefit (COMB) scheme, make sure you have entered the Scheme Contracted-out Number in the boxes just to the right of the End of Year Summary section on the P11.

Columns 1f to 1j (Statutory Payments and Student Loan Deductions)

Add up each of the entries in columns 1f, 1g, 1h, 1i and 1j and enter the totals for each in the corresponding box at the bottom of those columns.

Columns 3 and 6 (pay and tax totals)

The action you take will depend on whether the employee:

  • still worked for you at 5 April 2008,
  • started employment with you during the 2007-08 tax year, and you know their previous pay and tax details.

If these conditions are not met, fill in the 'In this employment' boxes only. If they are, proceed as follows.

Enter in the 'In previous employment' boxes any previous employment pay and tax figures shown on the P11. Then - if PAYE has been operated proceed according to the basis on which it was operated, as shown below.

Cumulative basis

  • Enter the final figures shown in columns 3 and 6 of the P11 at week 52 (or 53) or month 12 into the corresponding 'Total for year' boxes 'Mark any refund 'R'.
  • Subtract any 'In previous employment' figures from the 'Total for year' figures and put the result in the corresponding 'In this employment' boxes.

Week 1/month 1 basis

  • Add up all the amounts in columns 2 and 7 of the P11 for this employment and enter the totals in the 'In this employment' pay and tax boxes at the bottom of columns 3 and 6.
  • Add together the 'In previous employment' and 'In this employment' for each column and put the result in the 'Total for year' boxes.

K code

  • To complete the column 3 pay boxes of the P11, follow the appropriate cumulative or week 1/month 1 guidance above.
  • Add up the column 7 entries for this employment and enter the total in the column 6 'In this employment' box.
  • Add any column 6 'In previous employment' figure to the 'In this employment' figure and put the total in the 'Total for year' box.

Now you need to fill in your P14s. Part 4 will help you.

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Part 4 - filling in the form P14, End of Year Summary, for tax year 2007-08

Important notes

  • Your P14s must show the correct National Insurance number. Your Return will be rejected if:
    • any P14 shows a temporary National Insurance number, e.g. TN220157M for a male born on 22 January 1957, or
    • you use an incorrect National Insurance number format
  • If you used temporary National Insurance numbers during the tax year, remember to change them to the correct number before you file your Return. Third party software may do this automatically for you.
  • If you are unable to obtain the correct National Insurance number you must
    • leave the National Insurance box on the P14 empty and enter the date of birth and gender in the appropriate boxes. If you are unable to obtain the date of birth, you must enter the default date of 01/01/1901 in the date of birth box.

Use our National Insurance Number Trace form - CA6855 (PDF 55K), also obtainable from your Employer CD-ROM or the Employer Orderline, to get the correct National Insurance number for your payroll records.

  • You can test your online Return by sending it with a test flag if you use third party software. You can test part or complete Online Return and Forms - PAYE submissions, but you must file the final Return in the same way. Users can test any part of the Return when it is ready, regardless of whether you want to file in parts or not. You must remember to remove the test flag before filing your actual Return. If you fail to remove the flag your Return will be rejected and you may incur a late filing penalty if you fail to submit a complete Return by 19 May.
  • The HMRC National Insurance Contributions Office records the National Insurance contribution information that you send on each individual's National Insurance account. This is so that individuals can get the social security benefits that they are entitled to. Student loan information is also passed to the relevant records.

For more information see Employer Helpbook E13, Day-to-day payroll.

See example of a completed form P14 (Manual) (2007-08) (PDF 47K).

Some dos and don'ts

Do

If your agent is filing any part of your return online we do not need authorisation but you should:

  • agree with your payroll bureau or agent what information they are filing online
  • make sure that you give your payroll bureau or agent your payroll records when they need them to file your Return.

If you print your P14s

  • use the appropriate impact or laser printer version of form P14. See E3(2007), Employer Orderline Order Form
  • show dates as DD MM YYYY (for example, 04 02 1959)
  • make sure printing is clear in all the boxes
  • print only within the white boxes (the entries must not touch the box edges)
  • use font size 10, at 6 lines per inch.

If you are filling in all your forms by hand:

  • use form P14(Manual)(2007-08). The number is shown in the bottom right-hand corner
  • use a ball point pen, or similar, so that all three copies are easy to read; no carbon is necessary
  • write clearly. If we can't read them, we may need to send the forms back to you to fill in new ones
  • show dates as DD MM YYYY, with no punctuation for example, 04 02 1959 is right. Entries such as 04 02 59, or 04-02-59, or 04/02/1959 are wrong.

Don't

  • complete P14s in a pile, as the markings will copy through to the forms below
  • make alterations: if you make a mistake, tear up the form and fill in a new one
  • use £ signs
  • cross through boxes, or mark them 'N/A'. If no entry is required, leave the box(es) blank
  • use continental style seven.

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Filling in form P14

Make sure you have filled in your P11s following the instructions at Part 3 - Finishing off form P11.

Fill in a form P14 for each employee employed during the tax year (including those who have left during the tax year) using totals from the form P11.

If you file your P14s using PAYE Online for Employers check what your software does or use the on-screen help.

    Section on form P14

    Advice

    Employer's name and address

    • Show your full address, including the postcode.

    • Don't use sticky labels or a rubber stamp in this box.

    HMRC office name and Employer PAYE reference

    • Enter your HMRC office name and Employer PAYE reference from the front of form P35. You will also find this on the front of your P30BC, Payslip Booklet.

    Tax year to 5 April 2008

    If you are using a form P14 that does not have the year pre-printed

    • make sure the forms are for the right year (there is an illustration of the form P14 for 2007-08(PDF 47K))

    • enter all four numbers of the year, for example 2008.

    Employee's details National Insurance number

    Copy this from the front of form P11.

    • It must be two letters, six numbers, followed by one letter (for example, AB123456C).

    • Ensure that the full and correct number is quoted and can be read clearly. (See Important notes)

    Date of birth

    • Enter the day and month as well as all four numbers of the year your employee was born.

    Surname and first two forenames

    • If you don't know the employee's full forename(s), put their initial - or initials - at the start of each forename box.

    • Don't put titles (like Mr, Mrs or Ms), or nicknames, or familiar names (eg Jack instead of John, Peggy instead of Margaret).

    National Insurance contributions in this employment NIC Table letter

    • Enter the National Insurance Category letter you have used to calculate the employee’s NICs. Copy this/these from the End of Year Summary section on the back of form P11 (2007-08).

    Columns 1a to 1c

    • Copy these amounts from the End of Year Summary section of form P11(2007-08).

    • Make entries in whole pounds only. For example, in column 1a 3773 - not 3773.00.

    • The entries in these boxes must be 'right justified'. For example, in column 1b, '£572' is shown as,

      Example

    • If the employee is normally weekly or monthly paid - and earned consistently above the Earnings Threshold - the amounts in columns 1a and 1b inclusive should always be:

    • 1a - a multiple of 87 (LEL) if weekly paid a multiple of 377 (LEL) if monthly paid.

    • 1b - a multiple of 13 (ET-LEL) if weekly paid a multiple of 58 (ET-LEL) if monthly paid.

    • If there is an entry in column 1a, you must still send in form P14 - even though no NICs may be payable.

    • Where there are no earnings or no NICs to report, complete form P14 to show contribution category letter X and zero fill columns 1a to 1c.

    Columns 1d and 1e

    Note: If you are sending your P14s online you must complete columns 1a to 1c.

    • Copy these amounts from the End of Year Summary section on form P11(2007-08).

    • The amounts in these columns must be in pounds and pence.

    • Where you operate a contracted-out occupational pension scheme, and the column 1d total to be carried forward from the P11(2007-08) is a minus figure, enter 'R' in the corresponding box immediately to the right of the column 1d total boxes on the P14.

    • Where there are no earnings or no NICs to report, complete form P14 to show contribution category letter X and zero fill columns 1d and 1e.

    Note: If you are sending your P14s online, you must complete columns 1d and 1e. For NIC category letter 'C' and 'W' zero fill column 1e.

    Statutory payments in this employment

    Box 1f

    You can either

    • Insert the total amount of SSP paid to the employee in those tax months for which an amount has been recovered under the Percentage Threshold Scheme or

    • If it is easier for you to record all SSP paid in all tax months, instead of just in the tax months where you made a recovery, you can enter this amount instead.

    Boxes 1g to 1i

    • Copy these amounts from the corresponding columns on form P11(2007-08).

    Scheme Contracted-out Number

    • Only fill in this box if the employee is a member of a Contracted-out Money Purchase (COMP) scheme, COMP Stakeholder Pension (COMPSHP) scheme or the COMP part of the Contracted-out Mixed Benefit (COMB) scheme that you operate.

    • You can find this number on your Contracting-out Certificate. If you cannot find your Certificate, write to HMRC, Pension Share Scheme (APSS)
      Yorke House PO Box 62
      Castle Meadow Road
      Nottingham
      NG2 1BG.

    • Please leave blank if the employee is part of a Contracted-Out Salary Related (COSR) scheme or the COSR part of a COMB scheme.

    Members of a COMP or COMPSHP scheme, including the COMP part of a COMB scheme, receive a rebate of their NICs based on their age. This is known as an Age Related Rebate (ARR). When completing the employee's form P14, End of Year Summary, you must ensure that the correct Scheme Contracted-out Number (SCON) is entered on form P14 against the relevant earnings.

    Failure to enter the correct SCON, where contribution Table letter F or G applies, will result in non-payment of the ARR.

    For employees who move from one COMP or COMPSHP scheme to another, including the COMP part of a COMB scheme, show details of the earnings under each scheme on a separate line of the P14, even though there is no change in the NIC category letter. Enter the SCON of each scheme against the relevant entry on the P14.

    Student Loan Deductions

    • Copy this amount from the totals box at the bottom of column 1j on form P11(2007-08).

    • Enter whole pounds only on form P14.

    Date of starting and Date of leaving

    • Only make an entry in these boxes if the employee starts and/or leaves your employment during the 2007-08 tax year.

    • Please use figures only, for example 09 05 2007.

    Pay and Income Tax details

    In previous employment(s)

    • Copy this amount from the End of Year Summary section on form P11(2007-08).

    • Enter here details you have of pay and tax deducted for employments earlier in the year.

    In this employment

    • Copy this amount from the End of Year Summary section on form P11(2007-08).

    • Always fill in these boxes. The amount must be in pounds and pence.

    • If you have refunded more tax than you have deducted ‘in this employment’, you should enter ‘R’ in the ‘net refund’ box.

    Total for year

    • Copy this amount from the End of Year Summary section on form P11(2007-08).

    • Only fill in these boxes if the employee was working for you at 5 April 2008 and you know the pay and tax figures for the year, including those for any previous employments.

    Employee's Widows and Orphans/ Life Assurance contributions in this employment

    • Where an employee is legally obliged to pay contributions to a Widows/Widowers and Orphans, or Life Assurance fund, that qualify for tax relief but are not authorised under 'net pay arrangements' for tax relief, enter the amount of contributions paid up to a maximum of £100. For further information on 'net pay arrangements' see the CWG2, Employer Further Guide to PAYE and NICs, under 'Pensions contributions paid by employee'.

    Final tax code

    • Fill these boxes from the left-hand side.

    • Always show here the tax code you were using at 5 April 2008, or when you last paid your employee.

    • Only enter the tax code. Do not include any other characters like asterisks or leading zeros.

    • If you operated the tax code on a week 1/month 1 basis, enter 'W1' or 'M1' after the code. Do not use any other abbreviations.

    • Where form P11(2007-08) shows 'NI' in the tax code box, leave the tax code box on form P14 blank.

    • Change any suffix A or H code to a T code to avoid rejection of your return.

    • For online returns always use '0' (zero) not the letter 'O' when recording codes 0T or D0.

    Payment in week 53

    • If payment in Week 53 is included in the Pay and Tax totals, put one of the following notations in this box
      '53' if there were 53 weekly paydays in the year
      '54' if there were 27 fortnightly paydays in the year
      '56' if there were 14 four weekly paydays in the year.

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It would help if you put the forms into alphabetical order of surname, or in the order you list your employees on the P35.

  • If you use both forms P14 and approved substitutes, list and bundle them separately.
  • If you are sending in both landscape and portrait P14s, please arrange your P35 listing and P14 bundles in this order: landscape first, portrait second. This will speed up the processing of the forms.

Now you need to fill in your P35 - Part 5 - Filling in the form P35 will help you.

The example above uses the figures taken from the P11, part 3 Finishing off form P11.

Part 5 - filling in the form P35, Employer Annual Return for tax year 2007-08

Introduction

This section will help you fill in your form P35, Employer Annual Return for 2007-08.

If you previously filed online over the internet, and are currently registered to do so, then you will not receive a paper form. Instead a P35N (Notification to File) will be made available to view from your PAYE Online service page using the view employer notices option.

Paper forms P35 are issued by your Accounts Office towards the end of each tax year. If you haven't received yours by the end of March and you are not going to file online, contact your HMRC office. If you have 50 or more employees and are required to file online for 2007-08, you will not get a paper P35.

The paper P35 is a 4 page form.

  • Page 1 tells you what your obligations are, and where to get further help.
  • Pages 2 and 3 require you to list the details of your employees and summarise your payments for the year.
  • Page 4 contains several 'tick box' questions for you to complete before signing and dating the form.

Filling in pages two and three of form P35

Example of pages two and three of a completed form P35 (PDF 31K)

Part 1 - summary of employees and directors

You must list each employee for whom you are required to complete a form P11, Deductions Working Sheet or equivalent record.

Note: If some or all of your forms P14 are being sent by internet, Electronic Data Interchange (EDI) or Magnetic Media, there is no need to complete the Part 1, Summary of employees and directors, section of the Return.

If there are more than 10 entries you will have to use forms P35(CS), Continuation Sheets (or equivalents). If you didn't receive any with your form P35, or require some more, you can:

You can always use your own equivalent record as long as it contains the same information.

Please list:

  • for limited companies, directors first and mark their entries with an asterisk (*)
  • your employees in alphabetical order of surname, or in the same order as you have collated the P14s
  • for each employee, the total of employee's and Employer NICs recorded in column 1d of the 'End of Year Summary' box on form P11
  • for each employee, the tax deducted or refunded, recorded in the 'In this employment' box at the foot of column 6 on form P11

If you make a mistake and record the wrong entry:

  • draw a line through the entry so that it can still be read
  • record the correct detail alongside

Part 2 - summary of payments for the year

Please complete boxes 1 to 26 as applicable and check that your payments to the Accounts Office are correct. If you were not required to complete boxes 1, 2, 4 and 5 in Part 1 (see notes above) you must begin by entering the respective NICs and Income Tax totals for all your employees for whom you have completed a form P11 (or equivalent record) regardless of how your forms P14 have been submitted.

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Box

Description

Box 1

Add up the entries from the NICs column above (on form P35). Enter the total in Box 1. Mark minus amounts 'R'.

Box 2

You will only use this box if you prepare more than ten forms P14. Enter the total amount(s) of NICs brought forward from any form P35(CS), Continuation Sheets (or equivalents) used. Mark minus amounts 'R'.

Box 3

Add Box 1 and Box 2 together, and enter the total in Box 3. This gives you the total amount of NICs deducted. Mark minus amounts 'R'.

Box 4

Add up the entries from the Income Tax column above (on form P35). Enter the total in Box 4. Mark minus amounts 'R'.

Box 5

You will only use this box if you prepare more than ten forms P14. Enter the total amount(s) of Income Tax brought forward from any form P35(CS), Continuation Sheets (or equivalents) used. Mark minus amounts 'R'.

Box 6

Add Box 4 and Box 5 together, and enter the total in Box 6. This gives you the total amount of tax deducted. Mark minus amounts 'R'.

Box 7

You will only use this box if you asked your Accounts Office for an advance. Enter the amount you received in Box 7.

You would have asked for an advance if you had to make tax refunds to employees but didn't have enough deductions in hand from which to pay them.

You need to pay back these amounts because you received credit for paying them in Boxes 4 and/or 5, or 6. You may have recorded these payments on form P32, Employer Payment Record (or equivalent), or your P30BC, Payslip Booklet.

Box 8

Add Box 6 to Box 7 and enter the total in Box 8.

Box 9

Add Box 3 to Box 8, and enter the total in Box 9.

Box 10

You will only use this box if you made any Student Loan Deductions this year. Refer to the total box at the bottom of Col 1j on each of the forms P11. Add those totals together and enter the new total in Box 10 (whole pounds only).

Box 11

Add Box 9 to Box 10, and enter the total in Box 11. This gives you the total deductions made, including NICs, Income Tax and Student Loan Deductions.

Box 12

For further help refer to Employer Helpbook E14, What to do if your employee is sick. If you have paid Statutory Sick Pay (SSP) to your employees during the year, enter the amount you are entitled to recover under the Percentage Threshold Scheme (PTS). Include any payments received directly from your Accounts Office to cover the recovery of SSP that you have shown in Box 20.

Box 13

For further help refer to Employer Helpbook E15, Pay and time off work for parents. If you have paid Statutory Maternity Pay (SMP) to your employees during the year, enter in Box 13 the amount you are entitled to recover. Include any payments received directly from your Accounts Office to cover the recovery of SMP, which you have also shown at Box 20.

Box 14

For further help refer to Employer Helpbook E15, Pay and time off work for parents. Enter in Box 14 any compensation you are entitled to claim in addition to the SMP recovered.

Box 15

For further help refer to Employer Helpbook E15, Pay and time off work for parents. If you have paid Statutory Paternity Pay (SPP) to your employees during the year, enter in Box 15 the amount you are entitled to recover. Include any payments received directly from your Accounts Office to cover the recovery of SPP, which you have also shown at Box 20.

Box 16

For further help refer to Employer Helpbook E15, Pay and time off work for parents. Enter in Box 16 any compensation you are entitled to claim in addition to the SPP recovered.

Box 17

For further help refer to Employer Helpbook E16, Pay and time off work for adoptive parents. If you have paid Statutory Adoption Pay (SAP) to your employees during the year, enter in Box 17 the amount you are entitled to recover. Include any payments received directly from your Accounts Office to cover the recovery of SAP, which you have also shown at Box 20.

Box 18

For further help refer to Employer Helpbook E16, Pay and time off work for adoptive parents. Enter in Box 18 any compensation you are entitled to claim in addition to the SAP recovered.

Box 19

Add all Boxes from 12 to 18 together, and enter the total in Box 19.

Box 20

You will only use this box if you received funding from your Accounts Office to pay SSP/SMP/ SPP/SAP or to recover the amounts of SSP/SMP/SPP/SAP you have paid. Enter the total amount of funding received in Box 20. You may have recorded this information on your form P32, Employer Payment Record (or equivalent), or your P30BC, Payslip Booklet.

Box 21

Calculate Box 19 minus Box 20, to get the net amount of statutory payments recovered. Enter the total in Box 21.

Box 22

To check the total NICs, Income Tax and Student Loan Deductions minus the amount of statutory payments recovered,

  • calculate Box 11 minus Box 21, but

  • if Box 21 is a minus figure - add Box 21 to Box 11.

Box 23

You will only use this box if you made deductions from subcontractors during the year. Refer to your CIS300 Contractor Monthly Return. Add up Boxes 4 to 6 on these Returns and enter the total in Box 23 of the P35.

Box 24

Add Box 22 and Box 23 together. This is the amount payable by you for the year.

Box 25

Enter the total of NICs and tax that you have paid to your Accounts Office during the year. Remember to include any overpayment from the previous year transferred to this account by HMRC. You may have recorded your payments on form P32, Employer Payment Record (or equivalent), or your P30BC, Payslip Booklet.

Box 26

If a tax-free incentive payment was credited to your 2007-08 PAYE payment record for having sent any previous year's returns online, enter the amount. If the tax-free incentive payment was repaid directly to you by cheque, do not include the amount repaid.

Box 27

To check whether there is a balance to pay HMRC, calculate Box 24 minus Boxes 25 and 26. Enter the total in Box 27. If it is a minus figure, put 'M' in front.

Only fill in Boxes 28 and 29 if you are a limited company and CIS deductions have been taken from payments received for work in the construction industry.

Box 28

Refer to column E of the CIS132, or equivalent, for the amount of CIS deductions suffered during the year. Copy the total to Box 28 of the P35.

Box 29

To check whether there is a balance to pay HMRC, calculate Box 27 minus Box 28. Enter the total in Box 29. If it is a minus amount, put 'M' in front.

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Filling in page four of form P35

Now turn to page four of the form and use the prompts below to help you complete it.

Part 3 - checklist

Question 1

Tick 'No' if you have employees for whom you have not completed a form P14, or P38(S).

These employees are likely to be part-time or casual staff. If you tick 'No' you must complete a P38A, Employer Supplementary Return which you can get from the Employer Orderline or from your Employer CD-ROM.

Question 2

A 'free of tax' payment is a payment where the employer (rather than the employee) bears any tax due.

Question 3

Has someone other than you paid expenses or provided benefits to any of your employees during the year as a result of the employee working for you?

Question 4

This question is in two parts. If the answer to the first part of this question is 'Yes', you will have to complete and enclose a form P14 for each employee concerned.

Question 5

Did you pay any part of the employee's pay direct to anyone else, for example, paying school fees direct to a school?

If you did, was the payment included in the employee's pay for tax and NICs purposes and in the pay shown on the employee's form P14?

This does not include Attachment of Earnings Orders or payments to the Child Support Agency.

Question 6

A service company is a company through which the personal services of one or more persons are provided to end clients. For the purposes of this question, ‘service company’ includes a limited company, a limited liability
partnership, or a partnership.

The only engagements affected by the IR35 rules are those in which the worker would be classed as an employee of the client if it were not for the service company involvement.

Where the IR35 rules apply, the intermediary (service company) may have to account for an additional amount of PAYE and NICs on the deemed payment, which is based upon the income from the engagements, after an allowance for certain expenses and pension contributions.

All income, less any allowable expenses, received by a worker providing their services through a Managed Service Company, is liable to PAYE and NICs.

If you are a service company (as explained above) in the year to 5 April 2008, tick the first ‘Yes’ box under this question.

If you have deducted PAYE and NICs on deemed employment payments under either the Intermediaries legislation (IR35) or the Managed Service Companies legislation in respect of any person shown on the Return, tick the second box ‘Yes’.

In respect of the intermediaries legislation (IR35) only:

  • Where an engagement is within the rules but the deemed payment is nil because sufficient amounts of
    employment income have been paid, you should also tick the second box ‘Yes’.
  • If you tick the second box ‘Yes’ but the amount of the deemed employment payment is provisional, confirm
    this on a separate sheet and send it with your P35.
  • If you cannot finalise the amounts by 19 May 2008, you will not have to pay a penalty so long as you send in
    your Employer Annual Return by that date, and you pay all of the PAYE and NICs due in respect of the deemed
    payment by 31 January 2009. You will still be charged interest from 19 April 2008 until the PAYE and NICs are paid.

For further guidance about the Intermediaries legislation (IR35)

Please see the guidance about the Managed Service Companies legislation.

Part 4 - contracted-out pension schemes

If you operated a pension scheme that was contracted-out of the State Second pension, enter the Employer contracted-out number from your Contracting-out Certificate in this box.

Part 5 - employer's certificate and declaration

It is very important that you complete and sign this section.

This section consists of several statements covering the return of forms P14, P38A, P11D and P11D(b).

Tick the appropriate boxes to indicate that forms are enclosed, will be sent later, or are not due.

Where the answer to Question 1 of the Checklist is 'Yes' the answer to the P38A question can only be 'is not due'

The person signing the form must say who they are, for example, company secretary, payroll manager, proprietor and so on.

By sending your P35 online we accept that the requirement to sign the form has been complied with.

Filing your return in parts

If you want to file your return in parts, see our Guide to filing PAYE forms online and paying electronically.

You can file your return in parts from different places and in various ways. A part can be made up of P14s or a P35. For example, your agent could file all your P14s in one part online whilst you file the P35 on paper. All the parts making up an Employer Annual Return must be sent in an acceptable format by 19 May 2008 or you will be liable to a penalty.

Note. If you intend to file your Employer Annual Return (P14s and P35) solely on paper you must continue to file your form P35 and all your forms P14 together in full to your HMRC office.

If you are filing your return in parts you must:

  • Use a P14 Cover sheet, available from the Employer Orderline, for any part containing paper P14s, or your return will be rejected
  • Choose a unique identifier for each P14 part being sent
  • Show in the box provided the number of P14 parts being sent . This is the number of P14 batches (not including the P35 itself) not the total number of P14s being sent. If you use magnetic media the figure in this box must be the number of unique identifiers used to send your P14s. There is no longer a requirement to provide details of the permit number(s) on the P35
  • Only file one P35 for each PAYE reference reflecting all your P14 parts, irrespective of the number you are sending. Do not send a P35 for each P14 part
  • Not send a paper P35 if you have or intend to file your Return online.

Online Return and Forms - PAYE, or third party software, which lets you file your Employer Annual Return in parts will ask you for a unique identifier, which you must provide prior to the submission of each P14 part. The unique identifier can be anything that you find easy to remember, up to 12 characters.

Whoever files the P35 must know exactly how many P14 parts are being sent in total.

We can only check that your whole Return meets the Quality Standard once we have every part. To be certain that we have your complete return, we recommend that you send the P35 part last.

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Part 6 - what to do next

After you have filled in your P14s, P35 and where appropriate P38(S) and P38A, please

  • remove any pins or staples
  • detach any stubs or sprocket holes
  • separate the three parts of each form P14, or the individual copies if you use continuous stationery
  • make separate bundles of the top and second copies
  • don't fold forms P14
  • deal with the third part, form P60, as instructed in Part 7

By 19 May 2008, send your P35, the top two copies of forms P14 and any forms P38A, to your HMRC office, even if your payments of PAYE and NICs are not up to date.

Do not send in photocopies or forms P38(S).

Penalties are chargeable if forms P14 or P35 arrive late, see above for details.

Receipts will not be issued for an Employer Annual Return sent on paper. This is because acknowledging receipt of the Return may cause confusion if the Return fails the quality standard checks and has to be returned to you for correction.

Returns submitted online will receive an automatic acknowledgement after the Return details have passed the quality standard checks. Where an online Return is submitted in parts, an automatic acknowledgement will be issued for each part that passes the quality standard checks.

Paying any balance

Pay any outstanding amounts of monthly or quarterly PAYE and NICs for 2007-08 directly to your Accounts Office.

Do not send payments with forms P14 and P35.

How long to keep records

Whether you keep electronic or paper records, or both, you must keep the following forms for at least three years after the end of the tax year to which they relate.

  • Forms P11 and pay records. This applies even if an employee does not pay any PAYE or NICs in the tax year but you have completed a form P11 to keep records of earnings.
  • Forms P38(S) including those relating to students for whom a form P14 has been prepared.

Penalties

You may be liable to:

  • A late filing penalty if any part of your Employer Annual Return (P14s and P35) is received after 19 May 2008. A penalty notice will be issued on receipt of the 'late' Return. An interim penalty notice will be sent in September and the following January and May if your Return remains outstanding by these dates.
  • A penalty for not filing online, if you have to send your P14s and P35 online and any part is sent on paper or by magnetic media. For 2007-08, notice of this penalty will be sent from mid-June 2008.
  • A surcharge for not paying on time, if you have to make your monthly payments of tax, National Insurance contributions and Student Loan deductions electronically. These surcharges will be issued from mid-May.
  • A separate penalty when your Employer Annual Return is checked in detail, if it is found to be incomplete due to either negligence or fraud. You will get separate notices for each penalty.

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Part 7 - Form P60

By 31 May 2008 give a form P60 to each employee who was working for you at 5 April 2008 and for whom you have completed a form P11(2007-08) or equivalent record.

  • Destroy forms P60 for those employees no longer working for you at 5 April 2008.
  • Give only one form P60 to an employee, even if that employee has had more than one period of employment with you in the tax year - this P60 should only be for the period that covers 5 April 2008.
  • If an employee asks for another copy, you may issue a duplicate. Any duplicate must be clearly marked with the word Duplicate.

Part 8 - tax-free payments for online filing

If you have fewer than 50 employees and file your 2007-08 Employer Annual Return online you could receive a tax-free payment of £100. We will write to tell you if you are due £100 for filing online. If you are registered for 'PAYE Online for Employers - internet' we will confirm to you that we have credited the £100 tax-free payment, even if you chose not to get in-year notices (for example P6s) online. This confirmation will be available to view from your PAYE Online service page using the 'view employer notices' option.

Otherwise, you will receive your letter through the post. The 'letter' is entitled 'Online Filing tax-free payment' and confirms that the tax-free payment has been credited to your PAYE account.

When you have received the 'Online Filing tax-free payment letter', the majority of you can get your tax-free payment by simply reducing your future payments of tax and National Insurance contributions by £100. If there is no payment due you must send in a 'NIL' payslip to your Accounts Office to avoid unnecessary reminders being issued. Do not deduct the £100 tax-free payment from any 2007-08 payment due.

If you cannot claim your tax-free payment by reducing your payments to us, you can claim it back as a cheque. But again, you must wait until you have received the 'letter' entitled 'Online Filing tax-free payment'. The letter will tell you who you should contact to claim the tax-free payment back as a cheque.

If you have fewer than 50 employees and ceased trading during 2007-08 you can get the tax-free payment if you file your cessation Return online. But you must:

  • tell your HMRC office straight away that you have ceased
  • send us all outstanding tax and National Insurance contributions immediately.

We will credit the tax-free payment to your 2007-08 PAYE account if your records show a date of cessation during 2007-08.

You will only qualify for a tax-free payment if you are required to file an Employer Annual Return (P14s and P35). A tax-free payment will not be due where you were not required to complete a P11, Deductions Working Sheet or equivalent record for any of your employees.

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Part 9 - Forms P11D, P11D(b) and P9D

Fill in forms P11D and P9D or online equivalent to give information about employees' expenses and benefits in the tax year and form P11D(b) to give information about Class 1A National Insurance contributions.

Fill in forms P11D if you have paid or provided taxable benefits or expenses to:

  • directors
  • employees paid at a rate of more than £8,500 a year
  • members of the families or households of the above, including spouses, civil partners, children and their spouses or civil partners, parents, dependants, servants and guests.

Fill in form P11D(b) where taxable benefits or expenses subject to Class 1A NICs have been provided. The P11D(b) is also the employer declaration which must be sent along with forms P11D.

Fill in forms P9D if you have paid or provided taxable benefits to employees, but have not completed form P11D because they earned at a rate of less than £8,500 a year.

You can find copies of forms P11D, P11D(b) and P9D on the Employer CD-ROM in the Forms and Helpbooks section.

  • Use Fill in Forms On-Screen (without save option) to enter figures directly onto the forms.
  • Use Fill in Forms On-Screen (with save option) and the CD-ROM will help you to calculate the figures and then insert the figures onto the forms for you.

Completed forms should reach your HMRC office by 6 July 2008. Penalties are chargeable if forms arrive late.

Where you have completed a P11D for the taxable benefits or expenses paid or provided to an employee, give the employee a copy.

For more detailed information about benefits and expenses and Class 1A NICs see:

  • booklet CWG5(2008), Class 1A National Insurance contributions on benefits in kind - A guide for employers, a reference guide covering all aspects of Class 1A NICs
  • booklet CA33, Class 1A National Insurance contributions on Car and Fuel Benefits - a guide for employers, a guide if you provide employees with a company car and/or fuel which is available for their private use
  • booklet 480(2008), Expenses and benefits - A tax guide, a comprehensive guide to the tax law relating to expenses payments and benefits
  • booklet 490 (2008), Employee travel - A tax and NICs guide for employers, a guide setting out the approach which the HMRC will normally take in applying legislation on employee travel
  • P11D Guide (PDF 71K), a guide to the completion of forms P11D Return of expenses and benefits
  • P11D (PDF 60K) Return of expenses and benefits
  • P11D Working Sheets, optional working sheets for calculating the cash equivalent of certain benefits.
    • Working Sheet 1 Living accommodation
    • Working Sheet 2 Cars and car fuel
    • Working Sheet 3 Vans and van fuel
    • Working Sheet 4 Interest free and low interest loans
    • Working Sheet 5 Relocation expenses
    • Working Sheet 6 Mileage allowance payments and passenger payments.

You can get any of these forms or booklets from the Employer Orderline or they are available from your Employer CD-ROM.

Further information can also be found in the Expenses and benefits in kind, a guide to tax and NICs.

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Help and further guidance

Help and further guidance about tax and National Insurance contributions (NICs) is available from the following sources:

Your Employer CD-ROM

Your Employer CD-ROM has most of the forms and guidance you will need to run your payroll throughout the year.

The CD-ROM has:

  • a P11 calculator that will work out and record your employees’ tax, NICs and Student Loan deductions every pay day with a linked P32 record of deductions that works out what you need to pay us
  • a range of other Calculators that work out car and car fuel benefit, Statutory Payments and Student Loan deductions
  • a P45 checker that tells you what gross pay and tax to date figures to enter on the P11 for a new employee

There is also:

  • A Learning Zone to help you understand payroll topics such as Statutory Payments, Student Loan deductions and PAYE Online
  • A Payroll Basics section designed to help new and less experienced employers understand what to do when employing someone for the first time

Employer Helpbooks

Our Employer Helpbooks will help you understand and operate PAYE, NICs and other payroll related matters.

The Helpbooks are for guidance only, they are not comprehensive and have no legal force.

We also have other leaflets and booklets that give further guidance, for example:

You can view, download and print the full range of Helpbooks, booklets and other forms and guidance from our website or your Employer CD-ROM.

Or you can order copies from the Employer Orderline.

Forms and guidance in Braille, large print and audio
 For details of employer forms and guidance in Braille, large print or audio telephone the Employer Orderline and ask to speak to the Customer Service Team.

Yr Iaith Gymraeg
Ffoniwch 0845 302 1489 i dderbyn fersiynau Cymraeg o ffurflenni a chanllawiau.

By phone - Employer Helplines

(We may record calls for quality and training purposes.)

Employers who are deaf or hard of hearing

Textphone 0845 602 1380

You must have specialised equipment such as Minicom to use this service.

A list of Helplines and opening hours is available

Your HMRC office

Your own HMRC office can also help you. Please see our office contact details page.

Please tell us your Employer reference which is on correspondence from your HMRC office.

In person

We can offer you education and support on all aspects of your payroll explaining:

  • what you need to do
  • the deadlines you need to meet
  • the forms you need to fill in
  • the records you need to keep

We also have a range of workshops which are free of charge on many payroll topics.

Please see the further information about the workshops , or you can telephone the:

Online Services

Please visit our Online Services page, or if you don't find the information you require: