Understanding and using PAYE Online for employers
There's a wide range of PAYE (Pay As You Earn) notices, forms and returns that can be sent and received online. It's a fast, convenient and secure way of exchanging information with HM Revenue & Customs. It cuts down on time, admin and errors, and it means that you'll get up-to-date PAYE information, such as employee tax codes, almost instantly.
This guide tells you how to get started with PAYE Online for employers. It explains the different ways you can file online and how the free filing service on the HMRC website works. It also goes through the steps involved in filing (and amending) your Employer Annual Return online.
On this page:
- The different ways of filing online
- The registration process for PAYE online filing
- PAYE tasks you can, can't and must complete online
- The computer equipment you need to file online
- Viewing the notices and reminders HMRC send you online
- Filing your Employer Annual Return - forms P35 and P14 - online
- Filing online during the tax year
- More useful links
There are a number of PAYE online filing options you can choose from. You can use:
- the free ‘Online Return and Forms - PAYE’ service on the HMRC website, which is most suited to employers with small numbers of in-year forms to send or up to 50 P14s to file at the end of the year
- a commercial software package with an online filing function
- Electronic Data Interchange (EDI), which is suited to very large employers
- a payroll agent or bureau, who will file on your behalf
You are not restricted to using just one of these options. For example, when submitting your Employer Annual Return you could have an agent file your forms P14 at the end of the tax year but file form P35 yourself using HMRC's online service.
You can also use HMRC's free P11 Calculator as part of the online filing process. Employers who have nine or fewer employees at the end of the tax year can use the P11 Calculator to file their Employer Annual Return - forms P14 and P35 - online.
If you want to file online using either HMRC's free online service or commercial software, you will need to register with HMRC and activate your service within 28 days of receiving a Personal Identification Number (PIN) in the post. The steps involved in registration are explained in another of our guides - see the link at the end of this section.
There is a separate registration process if you plan to file PAYE forms using EDI. This is explained in another of our guides - see below. An important part of EDI registration involves making sure that you have the necessary software and communications links for the system to work.
If you want to file online using an agent or payroll bureau, then it will be up to the agent or bureau to ensure that they are registered with HMRC. Bear in mind, though, that you will still need to register with HMRC if you want to handle any of your other PAYE tasks online, such as receiving your tax coding notices.
You can send many of your PAYE forms and returns to HMRC online. To see a full list, use the link at the end of this paragraph. The next two sub-sections deal with forms and returns that either must be filed online or can't be filed online.
Employer deadlines for mandatory PAYE Online filing
It is gradually becoming compulsory for all employers to file a number of key PAYE returns and forms online.
If you have 50 or more employees, you must already file your Employer Annual Return - forms P14 and P35 - online. If you have fewer than 50 employees you don't have to file online until your 2009-10 return, but you can get tax-free payments for filing online before then.
There are separate deadlines for sending the following in-year PAYE forms online: P45 Part 1, P45 Part 3, P46, P46 (Pen) and P46 (Expat). (The last two of these are new forms, introduced from 6 April 2009.) Employers with 50 or more employees must now file these in-year forms online. And under government proposals all employers, regardless of the number of employees, will have to file them online from 6 April 2011.
Forms and returns that can't be sent online
There are a number of forms and returns that you cannot file online:
- amended forms P38A, P11D or P11D(b)
- more than five P11Ds without National Insurance numbers on them or 5 per cent of your total submission if it includes more than 100 forms.
- additional forms, such as SC60s or CIS25s
The main requirement for online filing is access to a computer with an Internet connection. This applies whether you're using the free online filing service on the HMRC website or a commercial payroll software package. EDI filing has much more demanding technical requirements, which are outlined in a separate guide.
If you use HMRC's free online filing service, then you don't need any further software to file online. If you use commercial software, you should check that it permits online filing. You can use the link below to see a list of the commercial software that HMRC has successfully tested.
Bear in mind that if you are using HMRC's free online filing service you must be connected to the Internet continuously while filling in your forms and submitting them. Some commercial software is more flexible on this point, allowing you to fill in your forms while you're offline and then file them when you go online.
When you register and activate the PAYE Online Service, HMRC will automatically start sending PAYE notices and reminders, such as forms P6 and P9, to you online. To access these, log on to the service using your User ID and password and select one of the following options:
- tax code notices
- student loan notices
- employer notices
- notices issued for tax years to 5 April 2009
If you provide an email address to the PAYE Online Service, HMRC can notify you each time a PAYE notice or reminder has been sent to you.
If you have 50 or more employees, you must file your Employer Annual Return - forms P14 and P35 - online. If you have fewer than 50 employers, you don't have to file online until your 2009-10 return but you can get a tax-free payment for filing online before then.
Your Employer Annual Return must be filed by 19 May after the tax year to which the return applies or you may face a penalty.
Filing using commercial payroll software
You should consult the instructions accompanying your software package for details of how to file your Employer Annual Return.
Filing using HMRC's free 'Online Return and Forms - PAYE service
When filing P14s, your first step is to enter some basic information about your employees into a database. This just involves typing in details such as their addresses and National Insurance numbers. Once you have entered an employee's details, they'll automatically be transferred to any form relating to the employee that you file with HMRC, including forms in subsequent tax years.
Once you've set up this database, you next need to complete your P14s using details of your employees' pay and tax/National Insurance contributions (NICs) deductions from your other records. HMRC's online filing service does not calculate these figures for you, but there's a range of calculators on their website and Employer CD-ROM that do.
If you use the integrated P11 Calculator on the Employer CD-ROM, it will automatically calculate these end-of-year figures for you. And if you have nine or fewer P11s to process, you can use the P11 Calculator to file online directly.
If you are using HMRC's 'Online Return and Forms - PAYE' service to file only the P35 element of your return, you do not need to set up the employee database. However, if you use the service to complete and file your P14s it will automatically produce a completed P35 for you to file.
What happens when you've filed your Employer Annual Return
As soon as HMRC receives your return online, it will be checked against the HMRC Quality Standard. You'll get a message - usually within a minute, but allow up to five - letting you know whether HMRC has accepted or rejected your return.
HMRC's free 'Online Return and Forms - PAYE' service, as well as many commercial software packages, are built around the Quality Standard, so in most cases any errors in your return will have been highlighted and corrected before you file.
If you have no return to make
If you do not need to make an Employer Annual Return, because you haven't had to complete a form P11 for any of your employees during the year, you must tell HMRC in writing or by phone. This will help them update their records and make sure that they do not issue you with a penalty charge for failing to file. You cannot inform HMRC online.
It is gradually becoming compulsory for all employers to file the following in-year PAYE forms online:
- P45 Part 1 - when an employee leaves your business.
- P45 Part 3 - when a new employee starts.
- P46 - when an employee starts but has no P45 from previous employment.
- Form P46 (Pen) - this replaced forms P160 and PENNOT from 6 April 2009. Use it for sending HMRC details of a new pension or annuity that you're starting to pay.
- P46 (Expat) - another new form from 6 April 2009. Use it for certain categories of worker seconded to work in the UK
Employers with 50 or more employees must already file these forms online. Under government proposals all employers, regardless of the number of employees, will have to file them online from 6 April 2011.
All employers, whether filing online or using paper forms, must include employees' gender and date of birth on the forms listed above.
If you are using commercial payroll software to file online, consult the accompanying instructions for details of the steps to take.
If you are using the free online filing service on HMRC's website, it will take you through the steps involved in filing in-year forms such as P45s and P46s. If you use HMRC's online service to enter an employee's basic details, such as name and National Insurance number, into a database, then this information will automatically transfer to any form you create for the employee.