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What is a P35 – Employer Annual Return?

Until April 2013, all employers (even companies with a sole employee) were required to file an Employer Annual Return by 19th May following the end of the previous tax year, consisting of forms P14 and P35. The Real Time Information (RTI) changes, implemented on 6th April 2013, have changed the way payroll data is communicated with HMRC in future tax years.

P35 Real Time Information

Real Time Information

For the tax year ended 5th April 2013, employers should still submit their P35’s as normal, however for future tax years, the P35 has been replaced by Real Time Information (RTI).

You should contact your accountant to find out how to migrate your current payroll procedures to RTI. You can find out more from the updated HMRC site here

P35 – The Basics

  • If you have any employees on your company payroll (including you if you are running a one-man limited company), then you (or more likely, your accountant) must submit an Employer Annual Return to HMRC.
  • The Return consists of form P14 (income tax, National Insurance, and other deductions for each employee on the payroll), and P35 (a summary of all deductions applied to all employees during the previous tax year).
  • Importantly, you must still file a Return even if an employee did pay any tax or NICs in the previous year.
  • These days, in line with an increasing number of HMRC services, employers must file their Employer Annual Returns online (with very few exceptions).
  • Even if your company has no employees to report on during the previous tax year, you must still let HMRC know that a Return is not due. Again, HMRC prefers this to be done online by the employer or its agent (accountant).
  • If your company files its return after 19th May, a monthly £100 penalty per 50 employees will be applied. If the Return still hasn’t been submitted after 4 months, a penalty notice will be sent out on 19th September and every four months thereafter until the Return has been received.

Further Resources

  • You can find manual versions of forms P14 and P35 online for reference purposes.
  • Read HMRC’s guide to the Employer Annual Return

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