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Small businesses are being encouraged to file their end-of-year tax returns online and claim up to £825 tax-free from the Inland Revenue (IR).

Internet filing of year end payroll returns will become compulsory for all employers from April 2010. Government financial incentives are available to businesses who switch to Internet filing from April 2005.

Small businesses can get up to £825 by filing their employer end of year tax returns online, the Inland Revenue has announced.

Almost one and a half million businesses will be eligible for the reward, which the Inland Revenue is offering to encourage online filing amongst British businesses. From May 2004, large businesses (with 250 or more employees) will have to file their returns online, while medium-sized businesses (50-249 employees) will have to pay tax online by May 2006.

While the deadline for small businesses, classed as having between 5 and 49 employees, is much later, the Inland Revenue is offering the incentive of a tax-free lump sum if they switch to online filing early. This starts from the tax year 2004-2005 and continues for 5 years.

The Inland Revenue has written to 1.6 million employers to tell them which size category they fall into and therefore what action they can take.

The Revenue claims that online filing, sending information direct to the Inland Revenue's computer, is secure and quick, and more reliable and more efficient than using paper.

Learn more at the Inland Revenue website

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