- PTA
What is a P45 Form?
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. Read on to find out what a P45 is, what it is, and why it's so important.
Definition of P45 Form
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. There are four parts, namely:
Part 1 - is submitted to HMRC by your former employer
Part 1A - your version of the module; keep your records
Parts 2 and 3 - to give to your new employer, or Jobcentre Plus if you no longer have a job
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).
Why is the P45 So Important?
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.
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.
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.
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.