Employers must submit their annual return online by 19 May 2010 to avoid penalties. However, employers with five or fewer employees can, for 2009/10 only, file the return on paper without incurring a fine, provided it is done by 19 May.

The only other employers who are exempt from online filing and are permitted to file on paper are:

• Employers entitled to operate PAYE using the Simplified Deduction Scheme for domestic employees (provided they have not previously received a tax-free payment for online filing)
• Practicing members of religious societies or orders whose beliefs are incompatible with the use of electronic methods of communication
• Employers who employ someone to provide care or support services at or from their home (subject to a number of conditions)
• Limited companies filing a return solely to submit an entry in box 28 of form P35 (‘CIS deductions suffered’) (these returns cannot be filed online)

More information on end of year PAYE procedures can be found on the HMRC website at http://www.hmrc.gov.uk/paye/payroll/year-end/checklist.htm