Understand the HMRC starter checklist, where to find them online and the meaning behind statements A, B and C.
Table of contents
1. What is an HMRC Starter Checklist?
The HMRC starter checklist is a .GOV form that replaced the P46 form back in 2013. It is used when new employees who start working for an employer don’t have a P45 but need to be added to the PAYE system. The checklist helps the new employer to gather personal information and details on things like student loans so they can establish the best tax code to use for their new employee. The starter checklist helps the employer to deduct the most accurate amount of income tax and national insurance in the event that they do not have the correct tax code from HMRC, although it may not be correct and require amendment in later payslips when the correct tax code is sent.
2. Where to Find the HMRC Starter Checklist
You can find the Starter Checklist on the HMRC website here. There is a printable paper version and an online version. However, neither version must be sent to HMRC. Instead, the form must be filled out by the employee and returned to their employer who will then send the appropriate information over to HMRC as part of their usual RTI submissions.
3. What are the Sections of the P46 Starter Checklist?
The starter checklist requests personal information about the new employee such as name and address. In addition, the employee is required to choose from three statements that best describes their personal tax situation. This enables the employer to put them on a suitable tax code (which may be an emergency tax code depending on the statement they choose). The employee must choose an option.
3.1 Employee Statement A
Employee Statement A – This is my first job since 6 April and I’ve not been receiving taxable Jobseeker’s Allowance, Employment and Support Allowance, taxable Incapacity Benefit, State or Occupational Pension.
If the employee chooses statement A they’ll be placed on the standard tax code, which is currently 1257L for 2021/2022 (previously 1250L for 2020/2021) so that if they haven’t received or lost their P45 they’ll be entitled to receive the full personal allowance (tax free-pay). This statement tells the Employer that they have had no other forms of taxable income during the tax year and want them to give you all the tax-free pay you are entitled to. For example, if the employee is paid monthly, they’ll receive £1,047.50 (£12,570 ÷ 12) of tax-free pay each time they get paid.
If the employee has not had any other taxable income and start their job part way through the tax year, the employer will use this tax code to ensure that the new employee receives any previous personal allowance they were entitled to in their first pay packet. That could mean the new employee pays very little tax in the early part of their new employment, depending on their gross pay.
This box should not be ticked on the starter checklist unless the new employee is certain they haven’t received any other forms of taxable income, otherwise, they could end up owing HMRC money.
3.2 Employee Statement B
Employee Statement B – This is now my only job but since 6 April I’ve had another job, or received taxable Jobseeker’s Allowance, Employment and Support Allowance or taxable Incapacity Benefit. I do not receive a State or Occupational Pension.
By answering yes to statement B on the starter checklist, the new employee will be placed on a W1 or M1 tax code which stands for week 1 or month 1, depending on whether they are paid weekly or monthly. This statement indicates that they have received other taxable income during the tax year that may affect how much personal allowance they are entitled to.
By using a W1 M1 tax code, employers avoid giving too much personal allowance to the new employee, leaving them in a position where they need to repay tax because they have received too much free pay which they may have benefitted from in their previous employment. The W1 or M1 tax code is a temporary code and it will be amended once the new employer receives an updated tax code from HMRC.
If an employee is placed on a W1 or M1 tax code and a correct code has not been issued then the first thing to do is for the employee to call HMRC on 0300 200 3300 to discuss their situation and get it changed. Remaining on a W1 or M1 tax code to the end of a tax year can mean that an individual end up paying too much tax and may be owed a refund.
3.3 Employee Statement C
Employee Statement C – As well as my new job, I have another job or receive a State or Occupational Pension.
By choosing statement C on the HMRC starter checklist means the employer will put the individual on one of the following tax codes, depending on their gross pay, and that they will not receive any personal allowance:
- Basic Rate (BR) where all earnings are taxed at 20%
- Emergency tax (OT) where all earnings are taxed at 20%, 40% and 45% depending on how much they are paid
- D0 tax code where all earnings are taxed at 40%
If an employee feels that any of these tax codes have been assigned incorrectly or have not heard anything from HMRC in regards to correcting the code, then they must call HMRC on 0300 200 3300. The longer they leave it, the more tax they’ll be paying, although they will be entitled to get a tax refund, if owed, through their payslip once their employer gets an amended tax code.
4. Do You Need a HMRC Starter Checklist if You Have a P45?
No, you don’t need to use an HMRC starter checklist if a P45 is handed to the employer. This P45 contains all the information an employer needs to set up a new starter on payroll, with the right tax code. Any changes required to this tax code will be issued by HMRC directly to the employer.