HM Revenue & Customs (HMRC) has issued an urgent alert to employers in Scotland – important PAYE changes are coming this spring, so make sure you’re prepared for them.

HMRC is writing to all employers in the region this month to remind then that, from this year, they must file their Employer Annual Returns online by the 19 May deadline – there is no longer a paper filing option for small employers with fewer than 50 staff. So, if you file your return on paper, even if it’s before 19 May, you could receive a penalty.

There are around 84,000 small employers with fewer than 50 staff in Scotland who will be affected by these changes.

To file online, employers must register with HMRC’s PAYE Online service – they can do this by visiting and clicking ‘Register for PAYE Online’. Smaller employers can then use HMRC’s own free software to file their employee data securely online, while larger employers can purchase a range of commercial software. Alternatively, an intermediary can file on an employer’s behalf.

Further help on employer filing is available from the HMRC website at or from HMRC’s Employer CD-ROM, which is being sent to all employers.

Also from May 2010, HMRC is introducing new penalties for late payment of PAYE – this includes Income Tax, National Insurance Contributions (NICs), student loan deductions and Construction Industry Scheme deductions.

Under these changes, employers may incur penalties if they don’t make PAYE payments on time, and in full. The penalties will be calculated as a percentage of the amount paid late, and, for in-year payments, the percentage charged increases as the number of late payments in the year increases.

Employers who think they may have difficulty paying should call HMRC’s Business Payment Support Service, before the payment is due, on 0845 302 1435. If they do, and HMRC agrees time to pay, it will not charge late payment penalties – provided the business keeps to the agreement.

More information on the new penalties can be found on the HMRC website at

HMRC’s Stephen Banyard said:

“Major changes to PAYE filing and payment are only a matter of weeks away, so employers need to make sure they’re well prepared for them. We will be writing to affected employers over the coming weeks, so please look out for this information, and take the time to read it.

“One key thing to flag up at this stage is that employers do not need to keep a hard copy of their Employer Annual Return if they file it online themselves. As a consequence, HMRC will be reducing its stocks of hard-copy PAYE forms – P35s and P14s. So please carefully consider your PAYE stationery requirements before ordering paper forms from HMRC.”