Doing PAYE online all year round

From 6 April 2009, if you have 50 or more employees you must send employee starter and leaver information and similar pension information online.

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

Forms that must be sent online

The details you must 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.
  • P46(Expat) – this is a new form we will be introducing in April 2009 and is only to be used where employees have been seconded to work in the UK. More information on this form will be provided shortly.

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.

Start early!

The deadlines may seem some way off, but we recommend you do not wait until 2009 or 2011 before you start sending your in-year information online and getting the benefits of online filing. Doing it online is quick, secure and convenient.

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. Check with your software developer that the version of the software you are using is capable of sending these in-year forms online.

Help and support

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.

Content

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 for online services before you can send or receive information online.
  • If you are registered already, you can choose to get in-year information online
  • 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

Filing options

There are a number of different filing options to choose from. 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:

  • HMRC’s Online Return and Forms – PAYE product (this is mainly for small employers)
  • off-the-shelf payroll software
  • a payroll agent or bureau
  • 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 Employer Annual Return may be sent using EDI.

New information you must provide from April 2009

We will be introducing a new paper P45 in October 2008 which will include the date of birth and gender fields. (See New stationery below.) From April 2009 you must show the date of birth and gender on all P45s, P46s and pension information.

We strongly recommend you start collecting this 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 or an incorrect National Insurance number.

New P45

From October 2008, the new A4 size P45 will run alongside the current A5 size versions until 5 April 2009. The new A4 size versions should be used from 6 April 2009 when the existing A5 pre-printed stationery will be withdrawn. The A4 versions contain two extra fields for Date of Birth and Gender which must be completed from 6 April 2009.

HM Revenue & Customs (HMRC) pre-printed A4 versions of form P45 are being phased in from October 2008. The A4 P45(manual) versions of the form are available now and should be used as soon as you have used up your existing stock of the A5 version.

There have been some issues with the spacing and alignment of the data fields on other versions of form P45 for use with printers and earlier editions have been withdrawn. Revised versions will be available by the end of November or early December 2008. In the meantime you can continue to use the old style A5 version of the form. Supplies of these are available from the Employer Orderline.

We apologise for any inconvenience the delay in making the following forms available may cause you:

  • P45(Continuous)
  • P45(Continuous)(e)
  • P45(Laser Continuous)
  • P45(Laser Sheet)

From the end of October, if you use HMRC’s Online Returns Forms – PAYE service you will be able to print parts 1A, 2 and 3 of form P45 onto A4 plain paper, when you have submitted the P45 part 1 (employee leaving details) to HMRC online. This facility will also be introduced in some payroll software packages.

Your employees may not recognise the new forms. You can reassure them that the form P45 has only changed in appearance and, apart from the new fields mentioned above, the information requested and the procedures around it remain unchanged.

A P45 is the form an employer completes when an employee stops working for them. It is a record of the pay and the tax that has been deducted from it so far in the tax year. A P45 has four parts - Part 1, Part 1A, Part 2 and Part 3. The employer sends Part 1 to HMRC and usually gives the employee the other three.

P46 (Pen)

We have introduced a new form, P46(Pen), which replaces the P160 and PENNOT, and new procedures that must be followed when starting to make pension payments for the first time. The form must be used from 6 April 2009.

It will help both HMRC and the new pension recipient if you always use this form when you start to pay a pension for the first time, even if the person you are making the pension payment to hands you a P45(Part 3). You must use it in place of form P46 if no P45(Part 3) is provided to you. And remember, if you have 50 or more employees, you must file this form online.

Please make sure that you follow the new procedures. You can find out more in the 2009 versions of Employer Helpbook E13 Day-to-day payroll and the Employer Further Guide to PAYE and NICs CWG2 which will be available in February 2009.

P46 (Expat)

We have introduced a new form, P46(Expat). It is only to be used for the following employees who are seconded to work in the UK.

  • individuals working wholly or partly in the UK for a UK resident employer on assignment while remaining employed by an overseas employer
  • individuals assigned to work wholly or partly in the UK at a recognised branch of their overseas employers business
  • all individuals included by an employer within a dedicated expatriate PAYE scheme
  • all individuals included by an employer within an expatriate modified PAYE scheme

The form must be used from 6 April 2009 and remember, if you have 50 or more employees, you must file this form online. Please make sure that you follow the new procedures which can be found in the 2009 version of Employer Further Guide to PAYE and NICs CWG2 which will be available in February 2009.

Quality checks

We have introduced quality checks for in-year submissions, similar to those for End of Year, to improve the quality of data.

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.

Common errors

Try to avoid these common errors when sending your in-year information online.

  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. (The valid way of entering this would be King’s Street.)
  2. The leaving date must be in the current tax year or in the previous six tax years.
  3. If the period (week or month number) is ‘week’, then the numerical entry must be between 01-54 or 56. If the week/month type is ‘month’, the entry should be between 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 the Week1/Month1 indicator is present total pay and total tax in this employment must be provided, but any pay and tax from previous employment(s) must not be included.
  7. IR 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. Use of IR Mark becomes mandatory for in-year forms filed online from April 2009.

Is your software up to date?

You must make sure that any payroll software that you use from April 2009 is upgraded to include the new quality checks and IR Mark for in-year forms.

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.

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.

For the first three 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.

Forms that you can receive online

We can send you these forms over the Internet:

  • P6 - notice to employer of employee tax code (or amended code) and previous pay and tax
  • P9 periodic - amended tax code (new tax year)
  • P11D(b) - Return of Class 1A National Insurance contributions
  • P35N – notification to file Employer Annual Return
  • SL1 - notification to start student loan deduction
  • SL2 - notification to stop student loan deduction