Smaller employers encouraged to file P45s and P46s online

27 August 2010

Smaller firms are being advised to file their P45 and P46 starter and leaver forms online.

The Institute of Chartered Accountants in England and Wales (ICAEW) said that doing so would help small firms prepare for the time that online filing for in-year PAYE forms becomes compulsory.

At the moment, firms with 50 or more employees must file their PAYE forms electronically or face a penalty charge.

But as from 6 April 2011, online filing becomes mandatory for employers with fewer than 50 workers.

HM Revenue and Customs (HMRC) has been urging smaller businesses to acclimatise to the new system by gaining practice through the online filing of starter and leaver forms.

P45 and P46 forms must be submitted each time an employee leaves a firm or a new recruit joins.

Electronic filing ahead of the April deadline would enable employers to become accustomed to the process and to bed down any new software.

In any event, employers not yet filing online will need to review their payroll policies in advance of the change to electronic submissions.

Anita Monteith, the ICAEW's tax faculty technical manager, said: "To avoid penalties employers need to ensure they do not send HMRC forms on paper when they should be filed online, or send two versions of the same form. Online filing is quick, secure and convenient, and can cut down on errors and the delays they can cause."