FIRMS that file their tax returns on-line can receive a bonus.

The Institute of Chartered Accountants in England & Wales (ICAEW) is reminding small businesses they can benefit from a £250 incentive from the Inland Revenue if they file their PAYE returns on-line.

Small employers with between one and 49 employees are not obliged to file their PAYE year-end returns on-line until May 2010, according to the ICAEW.

But the accountancy body said companies that start next year could receive up to £825 in incentive payments over the next five years, which can be set against future PAYE liabilities.

Voluntarily filing on-line in May 2005 would generate the £250 tax-free incentive. Another £250 is available the following year and diminishing amounts are available over the next three years to May 2009, making £825 in total.

In order to qualify for the incentive payment, the employer must file both the P14 and the P35 on-line using an Inland Revenue approved software product.

For more information click on: www.inlandrevenue.gov.uk/employers/onlineguide.