Filing season for Year of Assessment (YA ) 2025 is here, and choosing between Form B and Form BE is causing real confusion. If you pick the wrong form or classify your income incorrectly, LHDN might issue an unexpected CP500 instalment notice. Many pure salary earners received these notices recently — and it caught them off guard.
LHDN has clarified that CP500 notices are meant for individuals with non-employment income. If you only earn a salary, you do not need to pay CP500 instalments. The government also announced a penalty-free concession throughout 2026 for CP500 errors. But to avoid future headaches, you must get your YA 2025 filing right.
Form B vs Form BE: What Is the Difference?
Your choice of tax form depends entirely on your income type.
Form BE is for resident individuals who only have employment income. This covers your monthly salary, bonuses, and allowances where PCB (Monthly Tax Deduction) is already deducted by your employer. Passive rental income under Section 4(d) can also be reported on Form BE. The statutory deadline is 30 April 2026, with an additional 15-day grace period until 15 May 2026 for e-filing.
Form B is for resident individuals who carry on a business. You need Form B if you are a sole proprietor, partner, freelancer, online seller, or commission agent. Rental income is treated as business income under Section 4(a) only if the property is actively managed with comprehensive support services such as cleaning, security, and maintenance. If your rental is just passive income, it falls under Section 4(d) and can go on Form BE. The statutory deadline for Form B is 30 June 2026, with an additional 15-day grace period until 15 July 2026 for e-filing. Manual filing for Form B is no longer allowed from YA 2024 onwards.
Both forms share the same YA 2025 changes, such as the new 2% dividend tax on dividend income exceeding RM100,000 and updated tax reliefs. You choose the form based on how you earn your money, not the reliefs you claim.
| Form BE | Form B | |
| Who | Salary earners only | Business owners, freelancers, sole proprietors |
| Income type | Employment income, passive rental S.4(d) | Business income, actively managed rental S.4(a) |
| PCB | Already deducted by employer | No PCB on business income |
| Statutory deadline | 30 April 2026 | 30 June 2026 |
| E-filing grace period | 15 May 2026 | 15 July 2026 |
| Manual filing | Available | Not allowed (from YA 2024) |
Why Did Pure Salary Earners Get CP500 Notices?
LHDN issues CP500 notices based on your previous year's tax return. The system targets people with non-employment income where no PCB is deducted. So why did employees get them?
On 31 December 2025, LHDN issued a statement confirming that many employees received CP500 because their previous Form BE contained errors. The common mistake: keying bonuses or allowances under "other income" instead of employment income. Some taxpayers also declared one-off side income in the wrong category, causing the LHDN system to treat it as recurring business income.
When the system sees "other income," it assumes you have non-employment earnings and automatically generates a CP500 instalment schedule for the following year.
What to Do If You Received CP500 by Mistake
If you truly have employment income only, LHDN has confirmed you do not need to comply with the CP500 instructions. There is a penalty-free concession throughout 2026, so you will not face fines for missing these payments.
But you must correct your record. Submit Form CP502 (Application for Amendment of Instalment Payments) together with your EA form and a brief explanation to the CP500 Help Desk at mejabantuanCP500@hasil.gov.my. You can also submit via the LHDN portal.
The CP502 amendment deadlines are 30 June 2026 for the first revision and 31 October 2026 for the second revision.
If you actually do have non-employment income — like actively managed rental under Section 4(a) or freelance earnings — CP500 is a valid prepayment mechanism. While penalties are waived for 2026, unpaid instalments can attract penalties after the concession period ends. LHDN encourages voluntary payments to reduce your final tax bill when you file your return.
Practical Steps to Avoid CP500 Surprises
Here is how you can prevent this issue when filing your YA 2025 taxes.
1. Confirm whether you have business income. Ask yourself: do you run any side business, even a small one — online sales, freelance work, consultancy, commissions, or content creation? Is your rental income actively managed as a business under Section 4(a) with support services like cleaning, security, and maintenance? If your rental is just passive income under Section 4(d), it can go on Form BE. When in doubt, seek professional advice.
2. Follow LHDN working sheets for employment income. For Form BE, LHDN provides the HK-2 working sheet for employment income. It covers salary, wages, leave pay, overtime, fees, commissions, bonuses, perquisites, awards, and allowances. Complete HK-2 first and transfer the total to the employment income line in Form BE. This reduces the risk of accidentally entering bonuses or allowances under the wrong item such as "other gains or profits."
3. Use the correct lines for dividends, interest, and other investment income. These items have their own dedicated lines in Form BE and Form B. Do not lump them together with employment income or put employment-type items into these boxes.
4. Keep proper documentation for seven years. The Malaysian tax system relies on self-assessment. You do not submit all supporting documents with your return, but you must keep them for at least seven years. This includes EA forms, business accounts and records (if any), dividend vouchers, rental agreements, and receipts for reliefs and rebates. Good documentation protects you if LHDN raises a query or audit later.
Key Deadlines for YA 2025
| Form | Statutory Deadline | E-Filing Grace Period |
| Form BE | 30 April 2026 | 15 May 2026 |
| Form B | 30 June 2026 | 15 July 2026 |
| CP502 (1st revision) | 30 June 2026 | — |
| CP502 (2nd revision) | 31 October 2026 | — |
Need Help?
Contact KS Chia & Associates (AF001828) for professional advice on tax filing and compliance.WhatsApp us at 011 2366 5233.
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