Wondering what is a P45? And the meaning of all the different parts? In this guide, you’ll find out more about when you receive a P45 form, what the information on the different parts show and whether you should give it to your new employer.
Friendly Disclaimer: Whilst I am an accountant, I’m not your accountant. The information in this article is legally correct but it is for guidance and information purposes only. Everyone’s situation is different and unique so you’ll need to use your own best judgement when applying the advice that I give to your situation. If you are unsure or have a question be sure to contact a qualified professional because mistakes can result in penalties.
What’s a P45 and What Does it Mean?
A P45 is a UK tax form is created by HMRC but filled out by employers who are responsible for issuing payslips for the people that work for them. A P45 is issued by an employer when one of the employees on their payroll leaves their employment. The form contains important information such as:
- Personal details
- Leaving date
- Tax code
- Gross salary
- Income tax deducted
The figures that appear on one P45 relate to just the current tax year (6th April to 5th April each year), not the whole time a person was in their employment if that spanned more than one tax year.
For example, say a PAYE individual worked for a UK employer from 1 January 2022 to 30 September 2022 their P45 form will show their gross earnings and income tax deducted from 6 April 2022 to 30 September 2022. The employer will have issued a P60 with details of your earnings for the previous tax year, covering their employment between 1 January 2022 to 5 April 2022.
What is a P45 Used For?
A P45 is used to pass important information regarding pay, tax codes and deductions like student loans to new employers. That way deductions are made correctly. If you are self-employed, you’ll need to use the information on your P45 to enter onto your tax return.
What Does a HMRC P45 Form Look Like?
A P45 form is made up of four parts, although employees will only receive three:
- Part 1 – sent by the employer to HMRC (not given to you)
- Part 1A – for the departing employee to keep
- Part 2 – to be passed onto the leavers new employer
- Part 3 – to be completed by the new employer and sent to HMRC (now done electronically)
P45 Part 1A
The P45 form part 1A needs to be retained by the leaving employee. It contains important information including how much gross salary they were paid and tax deducted during their employment, as well as the tax code used when they left the job. This section may be needed:
- To fill in a tax return since all earnings need to be included for the tax year, which includes details of employment income in the employment section;
- As proof of earnings if applying for a loan or mortgage;
- To give to a new employer.
P45 Part 2 & 3
This section contains information for the new employer so they know what tax code to use (unless they have received notification from HMRC otherwise on a P6 form) and whether they need to make student loan deductions. This information ensures that individuals pay the correct amount of income tax as they move between employments and minimises the risk of under/over payment tax.
How to Get a P45?
You only get a P45 form when you stop working for someone on a PAYE basis, whether you have left voluntarily or not. Your old employer will issue one covering your income & taxes up to your leaving date to let both you and HMRC know that your employment has ended and the amount of tax you’ve paid and personal allowance you have used.
If you do not receive one when you stop working for your employer, make sure that you request your P45 – you’re entitled to it by law.
Do You Get a P45 Form If You Retire?
If you are retiring your employer will send Part 1 of your P45 to HMRC so they will know the correct tax code to use when you start receiving your pension.
How Long Is Your P45 Valid For?
A P45 is valid for the remaining tax year (which ends on 5 April each year). That’s because once the year is over, new tax codes will be put in place and your tax calculation starts fresh. For example, the most common tax code is 1257L for the 2022-23 tax year (previously 1250L).
That being said it is worth still holding onto your P45 because it is evidence of your earnings and how much tax you have paid.
Will the Job Centre give me a P45?
The Benefits Office will issue you a P45 if you were previously claiming Job Seekers Allowance but have now found a job. Your new Employer will ask for your P45 as contains your personal details, details of your earnings and tax code. They will need these details so they will deduct the correct amount of tax each time they pay you. If you have not received your P45 form contact your Benefits Office to request it.
Does Your New Employer Need Your P45?
You don’t need a P45 to start working for your new employer. If you don’t have a P45 or you don’t want to give your employer your P45, then you should speak to the person in charge of payroll at your new place of work as soon as you can. That way they can make arrangements to send you an alternative form known as a starter checklist (previously called P46). You must fill in this form if you want to avoid paying emergency tax because it helps get you on the right tax code until HMRC notifies your employer of the right code to use and iron out any tax overpayments.
Do You Get a P45 If You’re Self-Employed?
If you are self-employed you are taxed on your business profits each tax year. You don’t get a P45 in relation to your business income because you aren’t employed by anyone. You’ll pay any tax and national insurance you owe by filling in a tax return by 31 January each year. But if you were employed by anyone during the tax year for which you’re completing your tax return, you’ll need to include the information from your P45 in the employment section of your tax return.
If you’re self-employed and decide to go back into employment, for example, because you want to stop working for yourself, then you won’t have a P45 to give to your new employer. In this case, your new employer will probably ask you to fill out a new starter checklist (formerly known as a P46) which will help them decide which tax code you should be put on.
How to Contact HMRC About Your P45
If you are still unsure about the information contained on your P45 or are concerned that a mistake has been made, then contact HMRC on 0300 200 3300.
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