When starting a job, you need to provide your new employer with a variety of documents and information, and your P45 is one of the most important modules. Usually, everyone knows the name of the form, but far fewer understand what it really means. You can get a P45 here. Read the article to learn more about what it is, and why it's so important.
In the UK, when an employee leaves their job, their employer is required to provide them with a form called a P45. The P45 is a document that contains information about the employee's earnings and tax payments during their employment. The P45 is an important document that the employee will need when starting a new job, and it is also used by HM Revenue & Customs (HMRC) to calculate the employee's tax liability. In this article, we will take a closer look at the P45 form and its importance in the UK.
Definition of P45 Form
A P45 form is a document that an employer is required to provide to an employee when they leave their job. The form contains details about the employee's earnings and tax payments during their employment. The P45 form is made up of four parts: Part 1A, Part 2, Part 3, and Part 1B.
The P45 form provides your new employer with details of the amount of taxable pay you paid in the current tax year, the amount withheld, and your social security number when you left your last job.
Part 1A of the P45 form is sent to HMRC by the employer, while Part 1B, 2 and 3 are given to the employee. The employee is required to keep Parts 2 and 3 of the P45 for their records and give Part 1B to their new employer when they start a new job.
In other words, Form P45 is a statement or confirmation of the amount of tax you have paid on your pay to date during the tax year. It is usually given to you by your employer when you leave your job. Your next employer will use the information on the P45 employee form to register you with the new owner with HMRC. It also helps them move the employee into their payroll system.
There are four parts, namely:
Part 1 - It is submitted to HMRC by your former employer
Part 1A - It is your version of the module; keep your records
Parts 2 and 3 - Are meant to give to your new employer or Jobcentre. who holds one and sends the other to HMRC.
Your former employer is responsible for releasing your P45, although there is no legal time limit within which it must be released. Instead, employers are instructed to provide it on the last working day or "without reasonable delay" if this is not possible (for example, if the departure date falls within an annual leave period).
On Form P45, You Will Find the Following:
● The total gross income earned during that particular job.
● Tax paid in total up until the date of the termination of work, or the date on which benefits claims have ended.
● Tax and total gross income that was paid on income previously received.
A P45 can help keep your tax records current to date. The figures must be reviewed to ensure that they are accurate since errors can be made.
What Information Do I Require to Include on a P45 Form?
A P45 is a document that contains all pertinent information about income and taxes that HMRC and the new employer need to make sure your ex-employee remains on the correct tax code. This includes:
PAYE reference number
Name and other personal information of the employee who is leaving
National Insurance number
Leave date
Tax code for the date of departure
Repayments on student loans to continue - yes or no
Total pay and tax deduction during their entire tenure with you
The employee's name and address
The employer's name and address
The employee's tax code
The employee's National Insurance number
The total pay and tax deducted in the current tax year
The total pay and tax deducted in the previous tax year
As you will see, it's the data that's in your payroll record. There is nothing special or extra. Basic information, taxes and payment information. You don't need National Insurance deductions or pension contributions.
Getting an HMRC Form P45 from Your Employer
The easiest way to get an HMRC Form P45 is to request it from your employer. When you leave your job, your employer is required to provide you with a P45 form. If your employer does not provide you with a P45 form, you should contact them and ask for one.
If you have lost your P45 form or did not receive one when you left your job, you should contact your employer and request a copy. Your employer is required to provide you with a copy of your P45 form.
Getting an HMRC Form P45 from HMRC
If you are unable to get a copy of your P45 form from your employer, you can request one from HMRC. To do this, you will need to contact HMRC and provide them with your National Insurance number and your employer's PAYE reference number.
You can contact HMRC by phone or by post. If you contact HMRC by phone, you will need to provide them with your personal information and the reason why you need a copy of your P45 form. If you contact HMRC by post, you will need to provide them with a written request, including your personal information and the reason why you need a copy of your P45 form.
Completing the HMRC Form P45
Form P45 has three parts which need to be completed:
Completing Part 1 of the HMRC Form P45
Part 1A of the P45 form is completed by the employer and should contain the following information:
The employer's name and address
The employee's name and address
The employee's National Insurance number
The employee's tax code
The date that the employee left their job
Part 1B of the P45 form is completed by the employer and should contain the following information:
The employee's total pay and tax deducted in the current tax year
The employee's total pay and tax deducted in the previous tax year
The date that the employee left their job
Completing Part 2 of the HMRC Form P45
Completing Part 2 of the HMRC Form P45
Part 2 of the P45 form is completed by the employee's new employer and should contain the following information:
The employee's name and address
The employee's National Insurance number
The employee's tax code
The date that the employee started their new job
The employer's PAYE reference number
Completing Part 3 of the HMRC Form P45
Part 3 of the P45 form is also completed by the employee's new employer and should contain the following information:
The employee's total pay and tax deducted in the current tax year
The employee's total pay and tax deducted in the previous tax year
The date that the employee started their new job
Important Tips for Completing the HMRC Form P45
When completing the HMRC Form P45, it is important to ensure that all of the information is accurate and up-to-date. Any errors or inaccuracies can cause delays in processing and may result in incorrect tax payments.
Additionally, it is important to ensure that all sections of the form are completed correctly. Each section of the P45 form is important and must be completed accurately to ensure that the employee's tax liability is calculated correctly.
How to Answer Different Questions on P45 Form
The P45 form is an essential document in the UK, representing a record of an employee's pay and tax details from their previous employment. This form is crucial for tax purposes and transitioning between jobs. Below is a guide on how to answer the various questions on the online P45 form.
Section 1: Employer Details
Q: Employer PAYE Reference A: This is a unique number your employer uses to pay your taxes. It can be found on your payslip or previous P45 forms.
Q: Employee's National Insurance Number A: Enter your National Insurance number, a critical identifier for tax and social security purposes in the UK.
Section 2: Personal Information
Q: Title and Full Name A: Provide your legal title (e.g., Mr., Mrs., Miss, Ms.) and full name as registered with HMRC.
Q: Leaving Date (DD MM YYYY) A: Enter the date you finished or will finish your employment with your previous employer.
Section 3: Financial Information
Q: Student Loan Deductions A: If you have a student loan and deductions are being made, enter 'Y' for yes.
Q: Tax Code at Leaving Date A: This code, found on your payslip, determines how much tax is deducted from your salary.
Q: Last Entries on Payroll Record/Deductions Working Sheet A: Fill this only if your tax code is cumulative. Enter the week or month number, total pay to date, and total tax to date.
Section 4: Employment Pay and Tax
Q: Total Pay in This Employment A: Enter the total amount you have earned in the current tax year with this employer.
Q: Total Tax in This Employment A: Enter the total amount of tax you have paid in the current tax year with this employer.
Section 5: Additional Employment Details
Q: Works Number/Payroll Number and Department or Branch A: This refers to any internal reference number your employer may use. If unsure, leave it blank or ask your employer.
Section 6: Address and Contact Details
Q: Employee’s Private Address A: Provide your current home address, ensuring accuracy for any potential correspondence.
Section 7: Gender and Date of Birth
Q: Gender A: Indicate your gender by entering 'X' in the appropriate box.
Q: Date of Birth (DD MM YYYY) A: Enter your date of birth in the format day, month, year.
Section 8: Certification
Q: Employer Certification A: This section is for your employer to confirm the accuracy of the information provided. Ensure they have reviewed and certified it.
General Tips
Use capital letters for clarity.
Double-check all entries for accuracy.
Keep a copy of your completed form for your records.
If unsure about any information, consult your previous employer or HMRC guidelines.
By accurately completing your online P45 form, you ensure a smooth transition between jobs and maintain proper tax records, crucial for any taxpayer or businessman in the UK.
Why is the P45 So Important?
The P45 form is important for both the employee and the employer. For the employee, the P45 form provides important information that is required when starting a new job. The new employer will use the information on the P45 form to ensure that the employee is paying the correct amount of tax and National Insurance contributions.
For the employer, the P45 form is important because it is used by HMRC to ensure that the correct amount of tax is being paid by the employee. The P45 form provides HMRC with information about the employee's earnings and tax payments during their employment, which is used to calculate the employee's tax liability.
Without your P45 form, your employer cannot guarantee that you will get the correct social security number. This means you may be paying more tax or being placed on an emergency tax number. Although this money can be recovered by contacting HMRC, no one deliberately wants more paperwork, especially when it can be avoided so easily.
The P45 also has a number of functions that are not directly related to starting a new job. You will need it to fill out a tax return if necessary, as well as to apply for benefits and tax refunds if you are unemployed. You may therefore need to read your P45 to make sure you don't pay too much tax when withdrawing money from a pension. There are a variety of reasons P45s are important for you and for your workers:
● You have to provide these to meet the legal requirements.
● They will ensure that your employees aren't paying too little or many taxes.
● This means that former employees do not need to obtain an unexpected tax code when they begin their new job. This could help them save a significant amount of money in the beginning when they are paid by their new boss.
● The Department for Work and Pensions (DWP) requires P45 in order to process future claims for benefits.
● After retirement, your previous employees must provide their P45 to the pension company to ensure that they're not paying excessive tax for any withdrawals that they make from their pension accounts.
● You require a P45 in order to get tax refunds.
● If the employee you fired has other work and is required to submit an income tax return, then they'll have to fill out their P45.
● It's the way you inform HMRC about a new employee.
What Happens if an Employer Does Not Provide a P45 Form?
Employers are required by law to provide a P45 form to employees who leave their job. If an employer fails to provide a P45 form, they may be subject to penalties and fines from HMRC. Additionally, the employee may experience delays in starting a new job if they do not have a P45 form to provide to their new employer.
How Long is a P45 Valid?
A P45 is only valid for the entire tax year in which it was issued, but that doesn't mean you should remove it right after. You must keep these for your records at least 22 months after the end of the relevant financial year. However, you may want to keep it longer as HMRC reserves the right to conduct tax investigations up to 20 years after that time.
Who Issues the P45?
Your employer automatically gives and generates a P45 through its salary system. By law, your employer must give you a P45 at the end of your job - you can ask for it if they don't give it to you.
What Happens If My P45 is Not Correct?
If you get your P45, ensure that you have the correct information. If you're concerned about your personal information, contact your HR department to correct the information. If you believe your tax code is incorrect it is best to get in touch with HMRC. If you're about to start an entirely brand-new position, you might be able to fill out the 'Starter Checklist instead.
Do I Need to Keep My P45 Form?
Yes, it is important that you keep your copy and provide your final P45 to your new employer. If you don't, your new employer will usually have to use an emergency tax identification number against your paycheck and ask you to fill out form P46. P45 is also important if all of your income and tax information has not been recorded by the tax authorities. Unfortunately, this situation can occur and delay the reimbursement of the taxes due. P45 allows HMRC to quickly update its tax information. If you have to pay tax, you will get it back as soon as possible
Do You Have a Retired P45?
Your employer issues a P45 when you leave your job to retire. To ensure that you have entered the correct tax number when withdrawing your pension, you must pass the details on to your pension institution.
How Long Does It Take to Get a P45?
The employer must issue you a P45 whenever you quit your job regardless of the reason. However, depending on your circumstances you may not receive your P45 on the same date you are leaving. However, it is recommended that you receive it soon after taxes and other deductions have been taken care of for your final pay period.
Do You Get a P45 When You're Spoiled?
Regardless of how your job ended, you should get a P45 whether you quit, go bankrupt, or go bankrupt. If you don't have another job to move to, you'll need to bring your P45 to Jobcentre Plus to apply for benefits.
What if I lost my P45?
If you've lost your P45, you can't get a new one. When you start a new job without a P45, your new employer may ask you to complete a "beginner's checklist," which includes your personal financial information. Details of this can be used to calculate your tax number, although you may be given an emergency tax number if HMRC does not have sufficient information about your income and tax liabilities.
What Should I Do If a New Employee Doesn't Have a P45?
If you find that you are recruiting a new non-P45 staff member, complete the new HMRC Retirement Checklist. If there is no P45, the checklist will help you gather all the information you need to set up an employee in your PAYE system, including items such as:
● Personal information
● Loan obligations (including student loans)
● citizen service number
This checklist can be filled out digitally or as a printable document. Employees only need to provide this information to their employer instead of submitting the form to HMRC.
What Else Do I Need To Do When Changing Jobs?
In addition to obtaining your P45, you'll have to do a few administrative tasks prior to you starting employment. The day you start work you'll be expected by your new employer to ask for these:
● Your bank details
● A valid proof of ID Most often, it is an official driving license or a passport
● Address Details
● Your National Insurance number - if you're not sure what it is, GOV.UK offers advice on how to find it
What About a P46?
The P46 form was issued to anyone who hadn't had a job before, or who didn't possess the P45. The P46 form has been no longer in use however and is now replaced by the starter Checklist form. The Starter Checklist includes questions about the other jobs or benefits you may have. It also helps your employer determine the correct tax code prior to the time your first paycheck is sent out. If you don't have these details, you could be placed on the emergency tax code.
How Can We Help?
Our tax knowledge and experience at Pro Tax Accountant can help you with all of your tax returns and tax refunds. From maximizing labour costs to reducing taxes to our range of accounting services, we have what you need.
P45 form is an important document that is required by law in the UK. Employers are required to provide a P45 form to employees who leave their job, and the form contains important information about the employee's earnings and tax payments. The P45 form is important for both the employee and the employer, as it ensures that the correct amount of tax and National Insurance contributions are being paid. Employers who fail to provide a P45 form may be subject to penalties and fines from HMRC, and employees may experience delays in starting a new job if they do not have a P45 form to provide to their new employer.
How a Tax Accountant Can Help You with an Employee's Taxes in the UK
Navigating the intricacies of employee taxes in the UK can be challenging for both employers and employees. This is where a tax accountant becomes an indispensable asset. Their expertise in tax laws, regulations, and efficient tax planning can greatly benefit businesses and employees alike. Here’s how a tax accountant can assist in managing an employee's taxes in the UK:
Understanding Tax Codes and Deductions
A tax accountant can help interpret complex tax codes and ensure that employees are placed on the right tax codes. This is crucial for deducting the correct amount of tax from employees’ wages. They can also advise on various tax deductions and reliefs that employees might be eligible for, potentially reducing their tax liabilities.
Compliance with HMRC Regulations
Tax accountants stay updated with the constantly evolving HMRC regulations. They ensure that businesses remain compliant, avoiding potential penalties. Their knowledge extends to filing end-of-year reports, managing P45, P60, and P11D forms, and handling other compliance requirements with precision.
Guidance on PAYE and National Insurance Contributions
An accountant can manage the Pay As You Earn (PAYE) system effectively, which includes calculating and deducting income tax and National Insurance contributions from employees' wages. They provide guidance on different NIC classes and rates, ensuring accurate calculations and payments.
Support with Employee Benefits and Expenses
Tax accountants offer advice on the tax implications of various employee benefits and expenses. They can help in structuring benefit packages in a tax-efficient manner, ensuring both compliance and employee satisfaction. This includes guidance on taxable benefits, like company cars, health insurance, and travel expenses.
Assistance with Tax Inquiries and Investigations
In case of any tax inquiries or investigations by HMRC, a tax accountant can provide invaluable support. They can represent the business, handle correspondence, and provide the necessary documentation, significantly reducing stress and workload for the employer.
Planning for Tax-Efficient Remuneration
Tax accountants can help in planning tax-efficient remuneration strategies for employees. This involves structuring salaries and bonuses in a way that is beneficial for both the employee and the employer in terms of tax savings.
Employee Tax Training and Workshops
A proactive approach to tax education is crucial in any business. Tax accountants can conduct training sessions and workshops for employees to educate them about their taxes, available allowances, and how to manage their tax affairs effectively.
Pension Scheme Guidance
They provide advice on pension schemes and the associated tax benefits for both employers and employees. This includes guidance on auto-enrolment, pension contributions, and tax reliefs available on pension schemes.
Assisting International Employees
For businesses with international employees, tax accountants offer crucial guidance on residency and domicile issues, double taxation agreements, and tax implications for non-UK residents working in the UK.
Personal Tax Planning for Employees
Apart from handling business-related tax matters, tax accountants can also offer personal tax planning services to employees. This includes advice on income tax, capital gains tax, inheritance tax, and planning for future tax liabilities.
Resolving Payroll Issues
Expertise in payroll management is another critical area where tax accountants add value. They can resolve any payroll discrepancies, manage statutory sick pay, maternity pay, and ensure accurate record-keeping for audit purposes.
Keeping Up with Digital Tax Transformation
With the ongoing digital transformation in tax reporting (like Making Tax Digital), tax accountants can guide businesses through these changes, ensuring that they are using compatible software and are compliant with digital reporting requirements.
In summary, a tax accountant plays a pivotal role in ensuring efficient and compliant management of employee taxes in the UK. Their expertise not only helps in adhering to tax regulations but also aids in strategic tax planning, providing significant benefits to both employers and employees. As tax laws and regulations continue to evolve, the role of a tax accountant becomes increasingly vital in navigating these complexities and maximizing tax efficiencies.
19 FAQs about the P45 Form
1. Q: What should I do if my employer refuses to issue a P45?
A: If your employer refuses to issue a P45, you may contact HMRC for guidance. HMRC can advise on steps to take, which may include reporting your employer's non-compliance.
2. Q: Can I request a P45 if I'm self-employed?
A: No, P45 forms are only applicable to individuals who are employed. If you're self-employed, your tax affairs are handled through self-assessment, not a P45.
3. Q: Is a P45 required for part-time jobs?
A: Yes, a P45 is required for all types of employment, including part-time jobs, as it records your earnings and tax paid during that employment.
4. Q: How do I interpret the tax code on my P45?
A: Your tax code reflects your tax-free allowance and any additional allowances or deductions. Understanding your tax code can be complex, and it's advisable to consult HMRC or a tax professional for clarification.
5. Q: What if my P45 shows incorrect earnings?
A: If your P45 shows incorrect earnings, you should contact your former employer to issue a corrected P45. If they are unresponsive, reach out to HMRC for assistance.
6. Q: Can I use a P45 for multiple jobs?
A: No, a P45 is specific to a single employment and cannot be used for multiple jobs. Each job will have its own P45 reflecting earnings and tax details for that specific employment.
7. Q: What happens to my P45 if I return to the same employer?
A: If you return to the same employer, they may issue a new P45 for the new period of employment or continue from where the previous employment ended.
8. Q: Should I submit my P45 to HMRC?
A: No, you do not need to submit your P45 to HMRC. Part 1A is sent to HMRC by your previous employer, and you provide the remaining parts to your new employer.
9. Q: How does a P45 affect my student loan repayments?
A: Your P45 indicates whether student loan repayments are due. This information helps your new employer continue deducting the correct student loan repayments from your salary.
10. Q: Can I get a digital copy of my P45?
A: Typically, P45 forms are provided in paper format. However, some employers may provide a digital copy for your records, but this varies by employer.
11. Q: What if I start a job without a P45?
A: If you start a new job without a P45, you may need to complete a Starter Checklist so your new employer can determine the correct tax code for you.
12. Q: How does a P45 impact my tax return?
A: A P45 provides essential information for your tax return, such as total earnings and tax paid. It's crucial for ensuring the accuracy of your self-assessment tax return if you're required to file one.
13. Q: What should I do if my P45 details don’t match my payslips?
A: If there's a discrepancy between your P45 and payslips, contact your previous employer to rectify the issue. Inaccuracies can affect your tax liabilities.
14. Q: Can I request a P45 if I'm moving abroad?
A: Yes, you should request a P45 when leaving a job, regardless of whether you're moving abroad or staying in the UK. It's important for your tax records.
15. Q: Does a P45 include details of benefits in kind?
A: No, a P45 does not include details of benefits in kind. These are usually reported on a P11D form by your employer.
16. Q: What if I lose my P45 after giving it to a new employer?
A: If you lose your P45 after handing it to a new employer, inform them as soon as possible. They may have recorded the necessary information already.
17. Q: How do I handle a P45 if I have multiple jobs?
A: For multiple jobs, each employer will issue a separate P45 when you leave. It's important to manage each P45 carefully for accurate tax records.
18. Q: What role does a P45 play in pension contributions?
A: A P45 doesn’t directly relate to pension contributions, but it provides your earnings information, which can be relevant for assessing pension contributions and benefits.
19. Q: How do I use a P45 when changing jobs mid-tax year?
A: When changing jobs mid-tax year, provide your new employer with your P45.