PAYE44020 - employer returns: electronic employer returns: incentive payments
This subject is presented as follows
Background
Tax-free incentive payments will be made to small employers
(0-49 employees) over a period of five years if they use online
filing to file their annual return.
The incentive payments to be awarded over the five year
period are as follows
| 2004/05 | £250 |
| 2005/06 | £250 |
| 2006/07 | £150 |
| 2007/08 | £100 |
| 2008/09 | £75 |
An employer will not qualify for the incentive payment if any
part of the annual return is sent on paper or by using magnetic
media.
Qualifying employers
To qualify for the incentive payment employers must
- Have fewer than 50 employees (0 - 49 segmentation band)
- Submit their employer annual return online
And
- Ensure the return meets the quality standard
Small employers who qualify for an incentive payment are those who
- Are required to send an employer annual return (forms P14 and P35)
Or
- Use the simplified PAYE arrangements (forms P37 and P12)
And
- Submit their information online
The incentive payment does not depend on whether any remittances
of PAYE tax / NICs / student loan deductions were made during the
year.
Note: Payment will
not be made where the employer is not required to
complete at least one form P11 Deductions Working Sheet for their
employees.
Payment of the Incentive
The incentive will be given as a credit by BROCS against the
PAYE account during the year in which the return was successfully
filed online, not the year to which the return relates.
A letter will be issued advising the employer that they can
offset the amount against future payments made or alternatively the
employer can make a request for the incentive to be paid directly
to them.
The incentive payment will be paid to employers in all cases
regardless of whether the employer uses a payroll bureau / agent or
accountant to operate their payroll.
Clerical award of the in-year incentive payment
From April 2005 an employer who has ceased will be able to file
online at any time during the year. Any claims received for the
incentive payment to be paid before the year end will be made
clerically by staff in the Banking Operations office.
New functionality was allocated to enable Banking Operations
staff to deal with the clerical award of incentive payments. Any
claims received direct should be faxed to the nominated office in
Banking Operations after clarifying that the incentive payment is
due.
Incentive payment and late filing penalty
Small employers will receive an incentive payment for
successfully filing online, whenever that happens.
However if an employer does not send their return on time
when filing online,
the employer may be charged a late filing penalty.
To avoid a late filing penalty, employers must send a complete
annual return (Form P35 and relevant forms P14) by 19 May each
year.
Non-payment or withdrawal of an incentive payment
The incentive payment may not be due for the following reasons
- A return submitted when there is no requirement to file an employer annual return for that year
- An incorrect recording of whether the return was filed online
- An incorrect segmentation band
Or
- Any of the above
Where an incentive has been awarded to a small employer but it appears this should not have been awarded for one of the following reasons
- The employer submitted a return when there is no requirement to file an employer annual return for that year
- No return was due
- Nil return
Or
- No employer remittance submitted to the Banking Operations office
Note: This process is at present being reviewed. Current guidance can be found in SCS memo 74/03.
Appeals
An employer can appeal against the failure to be awarded an
incentive payment and against our decision to withdraw the
incentive payment.
If an employer has successfully filed online and has not been
awarded an incentive payment they can appeal that an incorrect
segmentation band has been allocated to them. This should be
treated as an appeal against the failure to award an incentive
payment and not a segmentation appeal. For more information see
subject 'Maintain Incentive Appeal'
PAYE44025 and ‘Employer
Segmentation - Appeals’
PAYE21096
