The P45 form is an essential document in the UK that details an employee's departure from a workplace. It serves a critical function for both the employee and the HM Revenue & Customs (HMRC), providing a record of the employee's pay and tax deductions up to their leaving date. Employers are required to complete this form online and distribute the appropriate parts to the departing employee and the HMRC, ensuring a smooth transition for tax purposes.
When an employee leaves a job, it's crucial to handle the transition smoothly for both the departing individual and the organization they are leaving behind. Among the documents facilitating this process is the P45 form, a critical piece of paperwork in the UK. This form captures vital details about the employee's departure, including their final pay and the taxes they've paid during their employment. It's divided into different parts, serving distinct purposes and audiences. Part 1 is for the HM Revenue & Customs (HMRC), ensuring the government is informed about the individual's employment status change. Then, there are Parts 1A, 2, and 3, which are designed for the employee, new employer, and the process of updating tax records, respectively. These components play a crucial role in ensuring the departing employee's tax situation is handled properly, avoiding potential issues with over or underpayment of tax. Additionally, the P45 form includes specific instructions for dealing with various scenarios that might follow the employee's departure, such as claiming a tax refund or registering as self-employed. This complexity emphasizes the importance of understanding and accurately completing the form to ensure a seamless transition for everyone involved.
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 in managing the administrative side of an employee leaving a company. This document, required by HM Revenue & Customs (HMRC), plays a vital role in ensuring that taxes are properly handled following an employee's departure. The process of filling out the form is quite straightforward, but it requires attention to detail to ensure all the information is accurate and complete. Here are the steps needed to correctly fill out the form:
Once the form is completed, Part 1 should be sent to HM Revenue & Customs without delay. Parts 1A, 2, and 3 of the P45 are to be handed to the leaving employee. This ensures that the employee and their future employer, or the applicable government office if they are claiming benefits, have the necessary tax information moving forward. Precise completion and timely distribution of this form are essential to keeping tax records straight and facilitating a smooth transition for both the employee and employer.
What is a P45 form?
A P45 is a document provided by an employer when an employee leaves a job. It contains details about the employee's salary and the taxes that have been paid during the employment period. The form comes in four parts: Part 1 is sent to HM Revenue & Customs (HMRC), and the employee retains Parts 1A, 2, and 3. It is important for managing tax affairs and starting new employment.
How do I get my P45?
Your employer should provide you with your P45 when you stop working for them. It is their responsibility to complete the form and distribute the parts appropriately: Part 1 to HMRC and Parts 1A, 2, and 3 to you. If you haven’t received your P45, check with your employer.
What should I do with my P45 when I leave a job?
Keep Part 1A for your records as it contains important information you might need for tax purposes. Parts 2 and 3 will be needed by your new employer or the Jobcentre if you're claiming unemployed benefits. Make sure to keep these parts safe, as copies are not available.
Why is having a P45 important?
The P45 is essential for ensuring you are taxed correctly in a new job or if claiming a jobseeker's allowance. It helps your new employer or Jobcentre Plus to understand your previous earnings and tax deductions, avoiding any emergency tax codes being applied which could result in paying too much tax.
What if I start a new job without a P45?
If you start a new job and don't have a P45 to give to your new employer, you may be taxed under an emergency tax code. This means you might pay more tax than necessary. To avoid this, inform HR or your payroll department that you don't have a P45 as soon as possible.
Can I get a copy of my P45 if I lose it?
No, copies of the P45 are not available. It's important to keep your P45 safe. If you lose your P45, you should notify your new employer or Jobcentre as they can contact HMRC to get the necessary information, but this could delay your tax code being correctly applied.
What happens to my P45 when I am unemployed?
If you become unemployed, take Parts 2 and 3 of your P45 to your Jobcentre Plus office. This will help them process any jobseeker's allowance claims and ensure you receive any tax refund you're entitled to at the end of the tax year or when your claim ends.
How does a P45 work if I'm going self-employed?
When moving from employment to self-employment, your P45 is still important for finalizing your affairs with HMRC. You should keep Part 1A for your records. Additionally, you must register as self-employed with HMRC within three months of becoming self-employed to avoid any penalties.
What should I do if I've stopped working and not claiming any benefits?
If you're not working and not claiming benefits, you may be eligible for a tax refund. In such cases, you should fill out form P50, "Claiming Tax back when you have stopped working," available from HMRC. Keep your P45 Part 1A as it contains information you'll need when applying.
One common mistake when completing the P45 form is the incorrect use of capital letters. The form instructions specify that capital letters should be used, but often, filers inadvertently use lowercase letters. This can lead to processing errors and may delay the updating of an employee's tax records. Ensuring that all entries on the form are completed using capital letters can help avoid these issues and ensure the accurate and timely processing of the form.
Another frequent error is related to the section on Student Loan deductions. Some filers may overlook or incorrectly enter information concerning whether a Student Loan deduction is due to be made. It's crucial to correctly enter 'Y' for yes if deductions should continue, or leave it blank if not applicable. Incorrect information in this section can lead to inaccurate payroll deductions, affecting an employee's take-home pay and loan repayment status.
Incorrectly inputting the tax code at the leaving date is also a common pitfall. The tax code is essential for determining the amount of tax to be deducted from an employee's earnings. If this is entered inaccurately, it can result in either too much or too little tax being deducted. Employees may find themselves facing unexpected tax bills or refunds at the end of the tax year. Paying close attention to the tax code, ensuring it matches the employee's situation, is critical for accurate tax deductions.
Lastly, inaccuracies in the employment start or leaving dates can lead to significant issues. These dates are essential for accurate record-keeping and tax purposes. An incorrect date can affect an employee's entitlement to benefits, tax liabilities, and even their employment history. Double-checking these dates for accuracy before submitting the form can prevent potential complications for both the employer and the employee.
When an individual leaves a job or transitions between jobs, the P45 form plays a crucial role in the process, assuring proper tax calculations and records. However, the P45 form is often accompanied by other forms and documents that facilitate smooth financial and administrative transitions for both the employee and employer. This list outlines some of these essential documents.
Understanding and utilizing these documents in conjunction with the P45 form can ensure effective management of employment transitions, accurate tax reporting, and compliance with legal requirements. It’s vital for both employers and employees to be familiar with these forms to facilitate smooth employment changes and tax-related processes.
W-2 Form (Wage and Tax Statement) in the United States: This form is quite akin to the P45 in the context that it's a document employers provide to their employees and the IRS at the end of each year. It outlines the employee's annual wages and the amount of taxes withheld from their paycheck, mirroring the way the P45 gives details on an employee's pay and taxes up until their departure date.
W-4 Form (Employee's Withholding Certificate) in the United States: The W-4 shares a conceptual similarity with the P45 in that it deals with tax withholdings from an employee's salary. However, the W-4 is filled out by employees to instruct employers on how much tax to withhold from their paycheck, as opposed to the P45, which is a cumulative record provided by the employer at the end of the employment.
1099-MISC Form in the United States: Used for reporting miscellaneous income, the 1099-MISC form bears resemblance to the P45 in the sense that it involves the reporting of an individual's earnings. However, it's distinct in its use primarily for independent contractors or freelancers, unlike the P45, which is for formal employees leaving a company.
P60 Form in the United Kingdom: The P60 form is a close counterpart to the P45 but serves a slightly different purpose. Issued at the end of the tax year, the P60 provides a summary of the employee's total pay and deductions for the year. While the P45 is geared towards employees leaving a job, the P60 is for those continuing in their position, encapsulating similar financial information for a different time frame and purpose.
P11D Form in the United Kingdom: The P11D form is related to the P45 but focuses on benefits in kind and expenses that are not put through the payroll. Although it deals with different types of remuneration than the P45, it complements the P45's objective of providing a comprehensive picture of an employee's earnings and taxes, including those that stem from employment perks beyond salaries.
When it comes to filling out the P45 form, accuracy and attention to detail are key. There are several do's and don'ts that can help ensure the process goes smoothly and accurately reflects the employee's details and circumstances. Below is a guide to help you navigate through this process:
Things You Should Do:
Things You Shouldn't Do:
There are several misconceptions about the P45 form that can lead to confusion for both employees and employers. Understanding these misconceptions is essential for correct handling of the form when an employee leaves a job.
Understanding these misconceptions about the P45 form ensures that both employees and employers can manage employment changes effectively and comply with tax regulations.
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