Doing PAYE online all year round

We have specialist people all over the country who can give you all the support and advice you may need to send your in-year PAYE forms or your Annual Returns online.

Doing it online is quick, secure and convenient.

Nearly one and a half million employers filed their Employer Annual Return (P35 and P14s) online this year, but now it is time for you to start thinking about sending your in-year PAYE forms online.

Employers with 50 or more employees must send employee starter and leaver, and similar pension information, online from 6 April 2009.

And all employers, regardless of how many employees you have, must send this information online from 6 April 2011.

Sending PENNOTs over the Internet

You can now send us PENNOTs (new starter pension information) over the Internet using third party software or our Online Return and Forms – PAYE service. We are sorry for the inconvenience during the period you were not able to send these forms.

The Local Test Service (LTS) has been updated to reflect these changes. But it will not be possible for us to update the Third Party Vendor Service (TPVS) until August 2008, so it will not reflect the live service until then. We apologise for this restriction to the test services.

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Benefits of doing it online

Doing it online is quick, secure and convenient. It also cuts out postal delays and the time it takes for us to process paper forms manually, meaning that your employees get the right tax code and pay the right amount of tax sooner.

Getting started

  • If you have not used our PAYE Online for Employers service before, you must register before you can send or receive information online. But, if you are registered already, you can choose to get in-year information online. And if you already use Electronic Data Interchange, contact your Live Service Account Manager to get started.

Find out more about doing business with us online

Employers: Forthcoming changes to HMRC’s Online Return and Forms – PAYE service

HMRC are moving to a new Online 'Forms and Returns service - PAYE' in October 2008. We will be migrating across the data you have already sent us over the past three years but removing any incomplete or non-submitted forms that you have stored with the current service. You should review any of these items, archive or cleanse them as appropriate and remove or submit them before we make the switch.

Forms that will have to be sent online

The details you will have to send online are:

  • P45 (Part 1) – Details of employee leaving
  • P45 (Part 3) – New employee details
  • P46 – Employee without a form P45
  • Similar information for people receiving a pension. We will be introducing a new form P46 (Pen), which will replace the P160 and the PENNOT, in April 2009.

Start early!

The deadlines may seem a long way off, but we recommend you do not wait until 2009 or 2011 before you start sending your in-year information online.

We suggest you start sending in-year forms online as soon as you can, so that you have your software and internal processes in place well before the deadlines.

Filing options

There are a number of different filing options to choose from. And the option you choose for in-year does not have to be the same one as you use for sending your Employer Annual Return. You can choose between:

  • a payroll agent or bureau
  • HMRC’s Online Return and Forms – PAYE product
  • off-the-shelf payroll software, or
  • Electronic Data Interchange (EDI) - computer to computer data transfer for employers with high volumes of PAYE forms and returns.

You can mix and match these options. So, for example, one branch can send its P45s over the Internet using third party software and another can send them using HMRC’s Online Returns and Forms product, while the end of year return may be sent using EDI.

New information you have to provide from April 2009

From April 2009 you will have to show the date of birth and gender on all P45s, P46s and pension information. But we will be introducing a new paper P45 in October 2008 which will include the date of birth and gender fields.

We strongly recommend you start collecting the date of birth and gender information from your employees now. The date of birth helps us to match employee information with their records, especially if there is no National Insurance Number (NINO) or an incorrect NINO.

Quality checks

From April 2008, we will be introducing the end of year quality checks for in-year submissions. This is aimed at improving the quality of the data held by us and employers.

Any forms you send us (either online or on paper) that do not meet our quality checks will be sent back to be put right and that could mean that it takes longer before your employees are paying the right amount of tax.

We are introducing these checks a year before employers with 50 or more employees have to start sending in-year forms online, so you have a chance to get used to them.

Common errors

We have introduced new quality checks to help improve the quality of the starter and leaver information employers send us on forms P45, P46 and pension notifications (PENNOT).

If any of the information employers send us fails these checks, it will be rejected and returned to them.

The error rate for these forms is low, with only 4 per cent of forms sent over the Internet being rejected, but these are the most common errors employers are making when sending their P45s, P46s and PENNOTs.

We are now only accepting new format starter and leaver forms, so employers submitting in the 2007 format will experience rejections and receive a ‘wrong format’ or ‘Authentication Failure’ message.

  1. P45 form now needs Address line 2 of the employee’s address. This extra line of employee’s address has not been required on other forms such as P14 and so the data in payroll systems may be missing or of poor quality with invalid characters, for instance King`s Street.
  2. The leaving date must be in the current tax year or in the previous 6 tax years.
  3. If the period (week or month number) is ‘week’, then the numerical entry must be 01-54 or 56. If the week/month type is ‘month’, the entry should be 01-12.
  4. P46 statement A, B, or C must be provided.
  5. Pay must be greater than or equal to tax.
  6. Where employers are operating a cumulative code, they must provide the period, (week or month number), total pay to date and total tax to date. Where Week1/Month1 indicator is present, total pay to date and total tax to date are not required but total pay and total tax in this employment must be provided.
  7. HMRC Mark is an optional feature that provides a receipt for the submission. Some payroll packages have been experiencing problems with this feature. Employers should ask their software supplier to fix the problem or turn off the feature for this year.

Is your software up to date?

You must make sure that any payroll software you use from next April is upgraded to include the new quality checks.

Talk to your payroll software provider if you are not sure.

Review the way you run your payroll

We recommend that you look at the way your payroll is organised. If you have offices in different locations, your payroll may be handled separately in each one. P45s and P46s may be handled locally when the rest of the payroll is done by your central payroll department.

You may need to start changing your internal processes to make sure that everyone responsible for payroll matters knows what they can send online now, and what forms they must send online from 2009.

Changes from April 2008

Changes to P46 processes

From April 2008, we have agreed a relaxation in the P46 process.

When a completed P45(Part 3) is not provided, your employee will not necessarily have to complete our form P46. You may ask them to give you this information on your own stationery or in an e-mail, for example. It will be up to you to decide how you get the P46 information and whether you need a signature from the employee for your own purposes. You can get the necessary information in a way that best suits your business need as long as your keep a record of where it came from.

P46 and the Lower Earnings Limit

You will have to send us a P46 (Statement A and B cases) when your employee’s earnings reach the Lower Earnings Limit, which is currently £90 a week, £390 a month or £4,680 a year.

Changes to the P46 reporting requirements from April 2008

From 6 April 2008 employers must notify HM Revenue & Customs (HMRC) of a new starter on form P46 when earnings reach or exceed the Lower Earnings Limit (LEL). Before April 2008, a P46 was needed when earnings reached or exceeded the Earnings Threshold.

When an existing employee, who currently earns between the LEL and the Earnings Threshold reaches the LEL, HMRC do not want the employer to submit a form P46. But at April 2009 the employer must send a P14 for 2008-09. And where their payroll software requires an entry in the tax code field, HMRC suggest the employer uses tax code 543L.

No P45(Part 3) or P46

If you do not get a P45(Part 3) or a completed P46 from your new employee, you will have to fill in section 1 of a P46 and send it to us. You must use the default code BR.

Penalties

From April 2009, there will be penalties for sending in-year forms on paper when they should be sent online. But we will not be charging these straight away.

At the end of the first, second and third quarters of the 2009-10 tax year, we will write to you if you have sent us paper forms when you should have filed online, reminding you of the new requirements and offering guidance and support. If you then send any paper forms during the fourth quarter (or later), we will charge you a penalty.