Small.biz gets teeny tax refund for online returns

You too can claw back £825!

The Inland Revenue yesterday promised that small employers in the UK - all one and a half million of them - can get up to £825 tax-free if they send in their employer end of year tax returns online.

The sweetener marks the opening salvo in a battle the taxman will wage over the next three weeks to raise awareness of regulation changes which make it compulsory for employers to file all their tax forms online.

From May 2004, large employers must start paying tax and other deductions electronically. And they must start sending end of year returns (P14 and P35 data) online by May 2005.

This move online for the Inland Revenue will continue so that medium-sized employers in 2006 must start online filing by May 2006. Small employers do not have to start online filing "until later". But those who start filing online early can get up to £825 tax-free from the Revenue over five years, starting with their 2004-05 end of year returns.

As size clearly matters for the Revenue, in case of any confusion the department will be "writing to 1.6 million employers" - a tad ironic to be doing this online drive by snail mail - to tell them whether they are a large employer (250 or more employees), a medium-sized employer (50 -249 employees), or a small employer (fewer than 50).

A guide for filing PAYE returns and paying electronically can be found here . ®

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