If you’ve ever started a new job or left one in the UK, you’ve likely heard the term “P45.” But what is a P45, and why is it so important for employees, employers, and job seekers? In this guide, we’ll answer all your key questions, explain the legal facts, and help you stay compliant.
What is a P45?
A P45 is an official payroll document issued by an employer in the UK when an employee leaves their job. It details your earnings and the tax deducted through payroll so far in the tax year. The P45 is essential for both employees and employers, as it ensures the correct payroll tax is applied in future jobs or when claiming benefits.
Why is a P45 form Important?
- For Employees: Ensures you pay the right amount of tax when you start a new job or claim benefits.
- For Employers: Legally required to provide a P45 when an employee leaves. Helps the next employer or HMRC calculate tax correctly.
- For Job Seekers: Needed when starting a new job or registering for Jobseeker’s Allowance.
What Information Does a P45 Form Contain?
A P45 is split into four parts (Part 1, 1A, 2, and 3) and includes:
- Employee’s name and National Insurance number
- Tax code and PAYE reference
- Total pay and tax paid in the current tax year
- Leaving date
What If Your P45 Contains Incorrect Information?
- Notify your previous employer immediately and request a corrected P45.
- If not resolved, contact HMRC with supporting documents (like payslips) to correct your tax records.
What Does a P45 Look Like?
- A P45 is a paper or digital document divided into four parts (Part 1, 1A, 2, and 3).
- It shows your name, National Insurance number, tax code, employer details, total pay, and tax paid so far in the tax year.
How Is a P45 Issued?
- Your employer must give you a P45 when you leave a job, either as a printed form or electronically.
- It is usually provided on your last working day or shortly after.
What to Do If Your Employer Won’t Issue Your P45
- Remind your employer that they are legally required to provide it.
- If they still refuse, contact HMRC for help and use a starter checklist (formerly P46) for your new job.
When Do You Get a P45 Form?
You receive your P45 from your employer on your last working day. It’s your employer’s legal responsibility to provide it, and you should never have to request it.
How Long Is a P45 Valid For?
A P45 is valid for the current tax year in which it is issued. After the tax year ends, it serves only as a record for your own files.
What Should You Do With Your P45 Form?
- Starting a New Job: Give Parts 2 and 3 to your new employer.
- Claiming Benefits: Give Part 2 to Jobcentre Plus.
- Keep for Records: Part 1A is for your records.
What to Do If You Lose Your P45
Losing your P45 can be inconvenient, but it’s not the end of the world. Here’s what you should do:
- Contact Your Previous Employer: Ask them to provide a duplicate or a statement with the same information. Employers are legally required to assist.
- Use a Starter Checklist: When starting a new job without a P45, you can fill out an HMRC starter checklist (previously called a P46). This helps your new employer apply a temporary tax code.
- Inform HMRC: If you cannot get a replacement from your employer, contact HM Revenue & Customs. They can check your records and advise on your tax code.
- Keep Payslips and Records: Retain your last payslip and any other payroll documents as proof of earnings and tax paid until you receive a replacement P45 or your tax code is confirmed.
By taking these steps, you can avoid paying too much tax and ensure your new employer has the correct information to apply the right tax code.
Legal Facts and References
- Employers are required by HMRC to provide a P45 when employment ends.
- The P45 helps HMRC track your tax contributions and ensures you’re taxed correctly in new employment or when claiming benefits.
- If you do not receive your P45, you can report your employer to HMRC.
Conclusion
Understanding what a P45 is is crucial for employees, employers, and job seekers in the UK. Always ensure you receive your P45 when leaving a job, and keep it safe for your next employment or benefits claim. For personalised advice or if you have issues with your P45, consult a qualified tax advisor or HMRC to stay compliant with UK tax law.
