smallbusiness.co.uk: Helping your business think big

Filing your employer’s PAYE End of Year Return online is the quickest and easiest way for small business owners to send HMRC their details before the 19 May deadline. It also pays for small businesses to file online, as those who do will qualify for the scheme’s £150 incentive.

The e-filing incentive works by allowing employers with less than 50 employees who file a valid return online to claim either a £150 tax-free payment or offset that amount against their next tax bill. As soon as the return is ready it can be sent, 24 hours a day, seven days a week. Below are some useful tips from SmallBusiness.co.uk and HMRC to help you file yours successfully and hassle-free:

Do you need to send an Employer's Annual Return? You only need to send an Employer’s Annual Return if you had to fill in at least one Deductions Working Sheet (P11 or equivalent) during the year. This is where:
-your employee has given you a 'P45(3)' form with a date of leaving in the current tax year
-you pay someone at or above the Lower Earnings Limit
-you deduct tax on earnings
HMRC send you a code number for an employee or director and you operate it against their pay.

Not sending a return? - You must contact your HMRC office (by phone or in writing) as soon as possible if you do not need to send a 2006-07 return. Beat the deadline - If you do have to send a return (P14s and P35), it is due by 19 May 2007. Don’t wait until the deadline, send it as soon as it's ready. If possible, try sending your return outside of office hours or at weekends to avoid busy times. If you had 50 or more employees on 30 October 2005 you must file online. If you had fewer than 50 employees at that date you may get a tax-free payment if you do so.

Register now to file online - You must register for and activate the PAYE internet service before you can send any part of your return online. Click here and go to the new user section.

Do not send more than one return - There is no need to send both a paper and online P35 for the same return.

Replacement passwords - If you have already registered for PAYE Online but need a replacement User ID or Password, click here and follow either the 'Lost User ID', 'Lost password' or 'Lost or expired Activation PIN' link.

If you have lost both your User ID and Password you should contact the Online Service Helpdesk on 0845 605 5999 as soon as possible.

Test your return - If you perform a test of your information on the HMRC website, remember to send a ‘real’ return as well. The online message to tell you that your test is successful is the same message that you will get when you send your real return. This message does not mean that you have sent your final 2006-07 return.

P35 tax-free payment Box 26 - The amount that you show may not be straightforward and HMRC recommend you check this online at www.hmrc.gov.uk/payeonline before completing your P35.

Changing your details - Once your return has been accepted you can only change the information on it by sending an ‘amendment’. Do this by:

- sending P14 and P35 details showing only the difference between the figure on the original Return and what it should be (for example, show ‘-100’ if the original return showed £100 too much tax)

- sending a letter to your HMRC office saying why your return was not full and complete in the first place.

Your tax-free payment - The quickest and easiest way that most of you can get your tax-free payment is to do it yourself and deduct £150 from your next PAYE payment to HMRC for 2007-08. You can do this as soon as you get the message saying ‘9004:The EOY Return has been processed and passed full validation.’

To get help with online filing, visit the HMRC website or call the HMRC Employers Online Services Helpline on 0845 605 5999.

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