A P45 is a form that is issued to UK employees when they leave a job. It’s used to ensure you are placed on the correct tax code when you start a new job.
It’s a legal requirement for the document to be provided within a reasonable time after the end of employment.
Your P45 is a very important document, and you should make sure you keep your copy in a safe place. In this guide, we’ll talk you through the form itself, what it is used for and who should get one.
Employees and employers alike need to understand the role of the PAYE document and when it should be issued.
What is a P45 Used For?
A P45 is required by your new place of employment for tax purposes. It’s primary purpose is to make sure you pay the correct amount of tax in your new role.
When you leave one job to start another, your old employer needs to issue you with a P45. It contains information on how much you’ve earned during the tax year to date, and what tax code you are on.
When you begin your new job, your employer uses the information on the P45 to apply the correct tax code to your new salary. This means they can deduct the right amount of tax from your wage slip.
The information on the form makes sure you do not end up on an emergency tax code when starting a new job.
Related: Do You Get a P45 if Self Employed?
Information On The Form
On a P45 you will find information about your employment and your income for the past tax year.
This information is then used by HMRC to ensure you are placed on the right tax code for your future wages. Being in the wrong tax bracket can lead to an employee underpaying or overpaying taxes, which is not ideal.
You will find the following information on a P45 form:-
- Personal details such as your name, address, and date of birth.
- National Insurance number.
- Student Loan details (if applicable).
- The date you left your job.
- Tax code you are on.
- Income for the tax year.
- Deducted tax.
P45 Parts Explained
There are different parts to the P45 form and each part has a different purpose, and contains information required by both employee and employer.
It is important to understand what the different sections are for, and who needs them. Getting your P45 is an automatic process and you do not need to do anything. You should, however, make sure all the parts are present and the details are correct.
P45 Part 1a
This part of a P45 form is for the employee’s records. It is a replica of Part 1 and is filled in by your ex employer.
In it is information including:-
- Employer’s details
- Employee’s personal details.
- Employee National Insurance number.
- Employee’s leaving date.
- Student loan deductions.
- Tax code
- Gross income for the tax year.
- Tax paid for the tax year.
P45 Part 1
Part 1 is the part of the form that HMRC requires to make sure you are placed on the correct tax code.
You should not receive Part 1 as this is sent directly to HMRC. Your 1A section is a copy of the information that HMRC will receive. If you feel any of this is incorrect, you should contact HMRC.
P45 Parts 2 & 3
Parts 2 & 3 are for your new employer who should keep one for themselves and send the other to HMRC.
If you do not have a new employer then the benefits office will require a copy instead. All the information on the P45 ensures your tax records are updated swiftly and correctly.
How Long is the Form Valid?
A P45 is valid for the entire tax year.
You will receive your P45 when you leave your current job. It will detail all your income information relevant to that tax year only. However, you should try and hold on to your P45 as long as you can, just in case of an HMRC audit.
Importance of a P45 Form
Employers issuing a P45 is a legal requirement. This means the form is a very important document.
It ensures the transition from one job to the next goes smoothly. It means your new employer can sort out your tax records right away. This prevents you from being placed on an emergency tax code and being in a situation of paying the incorrect tax.
It is also required if you need to claim benefits as they will need to see this while you are making your claim. It is also needed if you are heading into a self employed role as you will need the figures on it to complete a tax return.
How to Get a P45
You should automatically receive your P45 when you leave your job. This can be through quitting, retiring, redundancy, or being sacked. Everyone that leaves a workplace should get their P45.
This is a legal requirement that your employer needs to honour. Often your P45 will be attached to your final wage slip. This is the best case scenario as it means you do not need to chase it.
Should you find yourself without this form once you have worked your final day, then give it a little time. There is no set timeframe that an employer needs to hand over the P45 which makes for a great deal of variation in the UK.
Should it not turn up and your new employer needs it then you can chase it up with your ex boss. Try to remain calm and polite, it may just be an oversight on their part. If things didn’t end so well with your old manager then you can contact HR instead or HMRC themselves.
See Also: How to get a P45 from a previous employer.
How to Get a Lost P45
If your P45 is lost, it can be difficult to obtain a replacement copy. Your former employer may be able to provide you with another copy if it was issued digitally. However, this is not always possible and they have no legal obligation to give you a new copy.
If you can’t get a copy of your P45, don’t worry. You can instead use a Starter Checklist form (formerly known as a P46) which has all the information on it that HMRC needs.
Your new employer can fill this in with you and the information on it can be used to get you onto the correct tax code. It’s very important to fill out a new starter checklist accurately so your tax code can be sorted out as quickly as possible.
If Your Employer Refuses
If your former employer is not giving your P45 to you, don’t worry. The situation can be resolved. Your first port of call should be reaching out and asking them again. Do this in a professional, yet firm manner.
Ask for your P45 to be sent within a set number of days. If this doesn’t happen you can take additional steps.
You can contact HMRC directly and they can look into the matter on your behalf. Employers who do not fulfil their PAYE reporting obligations can face HMRC compliance investigations. This can result in a hefty fine and a lot of admin work, so most employers will want to avoid this situation.
If you don’t manage to get your former employer to give you the P45, you can also fill in a Starter Checklist. This can be used as an alternative to the P45. Your new employer should be able to offer you guidance with the form.
Do I Need a P45 or a P60 – What’s The Difference?
There is a clear difference between a P45 and a P60. Both these PAYE forms contain similar information, but are issued in different circumstances. The data within them is also used differently.
A P45 is given to every employee when they leave their job. In this form are details of the tax year they are currently in and details on income and tax for this year only. This form should be issued by the previous employer.
A P60, on the other hand, is issued to all employees annually. At the end of each tax year, employees will receive this summary of the income received and tax paid. This is issued by your current employer and can be used for proof of income for things such as a mortgage or bank loan.
A P45 is issued once at the end of employment, whereas a P60 is an annual statement of earnings.
P45 Alternative – Starter Checklist or P46
Once called a P46, there is now the option of filling in a Starter Checklist. This can be used in the event of a lost or never received, P45.
This form replaced the P46 (which is no longer valid) and can be used if it is your first job, you never received a P45 from your previous employer or you lost your copy.
It contains all the information HMRC needs to enter you on the correct tax code. This will prevent, or at least, reduce the time you need to spend on an emergency tax code. In turn, you will be paying the correct amount of tax and won’t require to pay extra or wait for a rebate.