The P45 form is an essential document in the UK that details an employee's departure from work, highlighting their earnings and the taxes paid during their employment. It serves a critical role in ensuring that HM Revenue & Customs (HMRC) and the individual's future employer are updated with accurate financial information. Employers are required to complete this form and provide parts of it to the departing employee, ensuring a smooth transition for tax purposes.
Navigating through the transition of leaving one job and moving on to another can involve a lot of paperwork, and one of the most important documents in this process in the UK is the P45 form. This document serves as a record of an employee's pay and tax details up until they leave their job. It's a critical piece of paper for both the employee and their future endeavors, whether that involves securing a new job, claiming jobseeker's allowance, or even notifying tax authorities about a change in employment status. The form itself is divided into parts—Part 1 is sent to HM Revenue & Customs by the employer, and Parts 1A, 2, and 3 are handed to the departing employee. Each section captures key details like tax codes, National Insurance numbers, total pay and tax to date, and other specifics relevant to the employee's payroll history. Additionally, this form addresses how to proceed with student loan deductions and provides instructions for both employees and employers on how to handle these documents, emphasizing its complexity and importance in ensuring a smooth transition for individuals moving between jobs or leaving the workforce. Whether it's for a new employer to use in preparing a new set of payroll records, for the individual claiming tax refunds, or for making a more significant employment-related claim, the P45 is indispensable.
P45 Part 1
Details of employee leaving work
Copy for HM Revenue & Customs
File your employee's P45 online at www.hmrc.gov.uk
Use capital letters when completing this form
Employer PAYE reference
Student Loan deductions
1
5
Office number
Reference number
Enter 'Y' if Student Loan deduction is due to be made
/
Tax Code at leaving date
6
2
Employee's National Insurance number
If week 1 or month 1 applies, enter 'X' in the box below.
Title – enter MR, MRS, MISS, MS
or other title
3
Week 1/Month 1
Last entries on P11 Deductions Working Sheet.
7
Surname or family name
Complete only if Tax Code is cumulative. Make no entry
if week 1 or month 1 applies, go straight to box 8.
Week number
Month number
First or given name(s)
Total pay to date
£
•
4
Leaving date DD MM YYYY
Total tax to date
Employee’s private address
8
This employment pay and tax. Leave blank if the Tax Code
12
is cumulative and the amounts are the same as box 7.
Total pay in this employment
Total tax in this employment
Postcode
Works number/Payroll number and Department or branch
9
(if any)
13
I certify that the details entered in items 1 to 11 on
this form are correct.
Employer name and address
Gender. Enter ‘X’ in the appropriate box
10
Male
Female
Date of birth DD MM YYYY
11
Date DD MM YYYY
When an employee dies. If the employee has died
14
enter 'D' in the box and send all four parts of this
form to your HMRC office immediately.
Instructions for the employer
•Complete this form following the 'What to do when an employee leaves' instructions in the Employer Helpbook E13 Day-to-day payroll. Make sure the details are clear on all four parts of this form and that your name and address is shown on Parts 1 and 1A.
•Send Part 1 to your HM Revenue & Customs office immediately.
•Hand Parts 1A, 2 and 3 to your employee when they leave.
P45(Manual) Part 1
HMRC 04/08
P45 Part 1A
Copy for employee
Student Loan deductions to continue
Complete only if Tax Code is cumulative. If there is an ‘X’
at box 6 there will be no entries here.
This employment pay and tax. If no entry here, the amounts
are those shown at box 7.
To the employee
The P45 is in three parts. Please keep this part (Part 1A) safe. Copies are not available. You might need the information in Part 1A to fill in a Tax Return if you are sent one.
Please read the notes in Part 2 that accompany Part 1A. The notes give some important information about what you should do next and what you should do with Parts 2 and 3 of this form.
Tax credits
Tax credits are flexible. They adapt to changes in your life, such as leaving a job. If you need to let us know about a change in your income, phone 0845 300 3900.
To the new employer
If your new employee gives you this Part 1A, please return it to them. Deal with Parts 2 and 3 as normal.
P45(Manual) Part 1A
P45 Part 2 Details of employee leaving work
Copy for new employer
Office number Reference number
Title - enter MR, MRS, MISS, MS or other title
5Student Loan deductions
6Tax Code at leaving date
If week 1 or month 1 applies, enter 'X' in the box below. Week 1/Month 1
7Last entries on P11 Deductions Working Sheet. Complete only if Tax Code is cumulative. If there is an ‘X’ at box 6, there will be no entries here.
£ •
This form is important to you. Take good care of it and keep it safe. Copies are not available. Please keep
Parts 2 and 3 of the form together and do not alter them in any way.
Going to a new job
Claiming Jobseeker's Allowance or
Employment and Support Allowance (ESA)
Take this form to your Jobcentre Plus office. They will pay you any tax refund you may be entitled to when your claim ends, or at 5 April if this is earlier.
Give Parts 2 and 3 of this form to your new employer, or you will have tax deducted using the emergency code and may pay too much tax. If you do not want your new employer to know the details on this form, send it to your HM Revenue & Customs (HMRC) office immediately with a letter saying so and giving the name and address of your new employer. HMRC can make special arrangements, but you may pay too much tax for a while as a result of this.
Going abroad
Not working and not claiming Jobseeker's Allowance or Employment and Support Allowance (ESA)
If you have paid tax and wish to claim a refund ask for form P50 Claiming Tax back when you have stopped working from any HMRC office or Enquiry Centre.
Help
If you need further help you can contact any HMRC office or Enquiry Centre. You can find us in The Phone Book under HM Revenue & Customs or go to www.hmrc.gov.uk
If you are going abroad or returning to a country
outside the UK ask for form P85 Leaving the United Kingdom from any HMRC office or Enquiry Centre.
Becoming self-employed
You must register with HMRC within three months of becoming self-employed or you could incur a penalty. To register as newly self-employed see The Phone Book under HM Revenue & Customs or go to www.hmrc.gov.uk
to get a copy of the booklet SE1 Are you thinking of working for yourself?
Check this form and complete boxes 8 to 18 in Part 3 and prepare a form P11 Deductions Working Sheet. Follow the instructions in the Employer Helpbook E13 Day-to-day payroll, for how to prepare a P11 Deductions Working Sheet. Send Part 3 of this form to your HMRC office immediately. Keep Part 2.
P45(Manual) Part 2
P45 Part 3
New employee details
For completion by new employer
Title – enter MR, MRS, MISS, MS or other title
at box 6, there will be no entries here.
To the new employer Complete boxes 8 to 18 and send P45 Part 3 only to your HMRC office immediately.
New employer PAYE reference
15
Employee's private address
9Date new employment started DD MM YYYY
10Works number/Payroll number and Department or branch (if any)
11Enter 'P' here if employee will not be paid by you between the date employment began and the next 5 April.
12Enter Tax Code in use if different to the Tax Code at box 6
13If the tax figure you are entering on P11 Deductions Working Sheet differs from box 7 (see the E13 Employer Helpbook Day-to-day payroll) please enter the
figure here.
14New employee's job title or job description
16Gender. Enter ‘X’ in the appropriate box
17Date of birth DD MM YYYY
Declaration
18I have prepared a P11 Deductions Working Sheet in accordance with the details above.
P45(Manual) Part 3
Filling out the P45 form is a crucial step when an employee is leaving a job, as this document records their pay and tax details up to their leaving date. These instructions will guide you through each part of the form, ensuring accuracy and compliance with HM Revenue & Customs (HMRC) requirements.
After completing Part 1, remember to complete Parts 1A, 2, and 3 as necessary, according to the instructions provided on each part. Each section collects different, but equally important, information. Part 1A is for the employee to retain, Part 2 is for the new employer or the Jobcentre if applicable, and Part 3 should be completed by the new employer and submitted to HMRC.
What is a P45 form and when do I need it?
The P45 is a document issued to individuals in the UK who are leaving employment. It summarizes an employee's tax contributions and earnings with that employer during the tax year. You'll need this form when changing jobs, to ensure your new employer uses the correct tax code and to make sure you pay the correct amount of tax. It is also necessary if you are claiming unemployment benefits or in certain circumstances when filling out a tax return.
How do I obtain a P45?
Your employer is responsible for providing you with a P45 form when you stop working for them. It consists of three parts: Part 1, which your employer sends to HM Revenue & Customs (HMRC); and Parts 1A, 2 and 3, which are given to you. If for some reason you do not receive a P45 upon leaving a job, you should contact your former employer to request it.
What should I do with my P45 if I start a new job?
When starting a new job, you should give Parts 2 and 3 of your P45 to your new employer. This allows them to understand your previous earnings and tax deductions and to apply the correct tax code. Consequently, this ensures that you pay the correct amount of tax in your new employment.
Can I get a copy of my P45 if I lose it?
Copies of the P45 are not available once issued. If you lose your P45, inform your new employer or the benefits office. They will then use a starter checklist to determine the correct tax code for you, although this may result in emergency tax deductions in the interim period.
What happens to my P45 if I leave the country or become self-employed?
If you are leaving the UK, you should keep Part 1A of your P45 for your records and may need information from it for filling in a tax return or to claim a tax refund using form P85. If you become self-employed, you will not need your P45 for tax purposes but should inform HMRC about your change in employment status, as different tax rules will apply.
Filling out the P45 form can be a straightforward process, but it's easy for individuals to make mistakes that could lead to complications or delays. One common error is not using capital letters where instructed. The form clearly specifies that all entries should be completed in capitals. This isn't merely a preference; it's a requirement that ensures the information is easily readable and processed correctly by HM Revenue & Customs (HMRC). Failure to adhere to this instruction might lead to misinterpretation of the data provided.
Another issue arises with the treatment of the 'Week 1/Month 1' box. Some people overlook the significance of this box and either leave it blank or mistakenly enter an 'X' without fully understanding the implications. The 'X' should only be entered if the 'Week 1/Month 1' tax rule applies to the employee at the time of leaving. This rule is critical for ensuring the employee is taxed correctly in their new employment or if they claim benefits. An incorrect entry here could result in the employee paying too much or too little tax initially in their new role.
Incorrectly reporting the total pay and total tax to date is another frequent mistake. Employees and employers must ensure that the amounts entered reflect the total value up to the leaving date. This is vital for accurate tax calculations. Any discrepancies between the reported figures and HRMC's records can cause issues for both the employer and the former employee. It’s particularly important when the tax code is cumulative, as it affects how future tax is calculated.
A further common error involves the misunderstanding of how to report student loan deductions. If a deduction is due, marking 'Y' in the student loan deduction box is crucial. However, some individuals fail to do this correctly, either by omitting the entry entirely or misunderstanding the conditions under which a 'Y' should be noted. This oversight can affect the former employee's student loan repayment schedule and lead to discrepancies in the amount owed.
When processing the P45 for an employee leaving a job, various other forms and documents often come into play, highlighting the multifaceted nature of employment and tax matters. These documents span across different needs—from starting a new job, updating personal information, to ensuring compliance with HM Revenue & Customs (HMRC). Understanding each of these documents provides a clearer view of the administrative landscape surrounding employment transitions.
Each document plays its part in the broader spectrum of employment and tax regulation, ensuring both compliance with legal requirements and the accurate processing of an individual's tax and employment records. Whether an individual is changing jobs, starting anew, or adjusting their working status, these documents ensure the transition is smoothly managed in alignment with HMRC procedures.
The W-2 form used in the United States is quite similar to the P45 form in the UK, especially regarding its purpose of documenting an employee's annual wages and the amount of taxes withheld from their paycheck. Both forms are indispensable when an employee is preparing their tax returns, offering a recap of earnings and taxes paid over the fiscal year. The primary difference is the W-2's focus on annual documentation, whereas the P45 is issued when an employee leaves a job.
Another comparable document is the W-4 form, which, like the P45, deals with tax matters but serves a different function. The W-4 is used by employees to declare their tax withholdings to their employer, whereas the P45 is a statement provided by the employer summarizing an employee's tax contributions and earnings at the point they leave the company. Both are critical to ensuring accurate tax calculation but at different stages of employment.
The 1099 form, particularly relevant in the context of non-employment compensation in the U.S., shares similarities with the P45 in its tax-related nature but caters to a different audience. The 1099 is often used for freelancers or independent contractors to report earnings that are not subject to withholdings, in contrast to the P45's focus on traditional employment and the end of such employment relationships.
The I-9 form, though more concerned with employment eligibility within the U.S., indirectly ties into the broader spectrum of employment documentation like the P45. The I-9 verifies an employee's legal right to work in the U.S., existing as a complement to forms like the P45 that deal with tax and payroll matters, by ensuring the workforce is legally verified.
The P60 form, a UK counterpart to the W-2, shares a closer relationship to the P45, providing an annual statement of earnings and taxes paid by an employee. Unlike the P45, which is given when employment ceases, the P60 summarizes the tax year for current employees. Both documents are vital for personal tax submission purposes in the UK.
The P11D form in the UK also exists within the same ecosystem, detailing benefits and expenses that are not put through the payroll but have tax implications for the employee. While it serves a different purpose, its role in the tax and employment documentation process aligns with the P45's objective of ensuring tax affairs are in order upon the conclusion of employment.
Finally, the Tax Credit Certificate in Ireland resembles the P45 in its functionality, providing individuals with details of their tax credits and standard rate cut-off point. Similar to the purpose of the P45, it helps in managing an individual's tax affairs, albeit not specifically related to employment cessation. Both forms are integral to the individual tax assessment process, ensuring taxpayers and employers alike are aware of their tax obligations and entitlements.
When filling out a P45 form, it's crucial to handle the details with care and accuracy. The P45 is a document detailing an employee's pay and taxes when they leave a job. Following best practices can ensure the process goes smoothly for both the employer and the employee. Here are some dos and don’ts to consider:
These steps are designed to ensure a smooth transition for the employee exiting the organization, comply with UK tax laws, and avoid any potential issues with HMRC. Proper completion and timely submission of the P45 form are essential parts of the payroll process, facilitating accurate record-keeping and tax compliance.
Understanding the P45 form is crucial for both employers and employees navigating the process of leaving or starting a new job. However, several misconceptions surround the P45, leading to confusion. Here's a clearer insight into the common misunderstandings about the P45 form.
P45 forms are only for the employee: Actually, the P45 form is essential for both the employee and their new employer. It provides critical tax information that helps avoid any emergency tax code applications, which could lead to overpaying tax initially.
You don't need a P45 if you're not starting a new job immediately: This is incorrect. The P45 form is valuable for tax purposes even if you're not moving directly to another job. For example, it can be necessary when claiming jobseeker's allowance or other benefits.
The P45 form is digital: While many processes are moving online, the P45 form is still a physical document. Employers must give employees parts 1A, 2, and 3 when they leave a job. Part 1 is sent directly to HM Revenue & Customs (HMRC) by the employer.
All parts of the P45 are the same: Each part serves a different purpose. Part 1 is for HMRC, part 1A is for the employee to keep for their records, and parts 2 and 3 are for the new employer to assist with the new employee's payroll setup.
If you lose your P45, you can get a copy: Copies of the P45 are not available. If an employee loses their P45, they cannot obtain a new one, which can complicate starting a new job or claiming benefits.
You must always hand your P45 to your new employer: While handing your P45 to your new employer is standard practice, there are instances where you might send it to HMRC instead, especially if you want to keep your previous earnings private.
The P45 includes details about your health: The P45 form strictly relates to your employment and income tax details. It does not contain any personal health information.
Self-employed people get a P45: This is a misconception. P45 forms are related to employment under a PAYE (Pay As You Earn) system. If you're leaving employment to become self-employed, the P45 will be your last one until you're employed under PAYE again.
Student loan deductions are not included on the P45: In fact, the P45 form does indicate whether student loan deductions were made. This information helps ensure that the new employer continues or discontinues deductions as necessary.
Tax codes on your P45 must match your new job's tax code: Not necessarily. Tax codes are personalized based on individual circumstances and can change with new employment. Your new employer will adjust your tax code as needed, based on the information in your P45 and P11D if applicable.
Clearing up these misconceptions can make transitions between jobs smoother and ensure taxes are handled correctly, benefiting both employers and employees alike.
Filling out and using the P45 form is an important process when an employee leaves a company in the UK. Here are six key takeaways to ensure both employers and employees handle the form correctly and understand its significance:
Understanding and correctly handling the P45 form is essential for seamless transition between jobs, ensuring accurate tax treatment, and maintaining compliance with HMRC regulations. Both employers and employees play critical roles in this process.
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