P45s explained

You need to check your employee has this when recruiting, and issue one if they leave

A P45 is the form you complete when an employee stops working for you. You should also receive one from new employees when they start working for you as it will give a record of their tax status and earnings from their previous employment.

Put simply, a P45 is a record of the pay and the tax deductions of an individual so far in the tax year. A P45 has four parts – part 1, part 1A, part 2 and part 3. Since the introduction of Real Time Information (RTI) in 2013 you no longer send Part 1 to HMRC but you must report all starter and leaver information via your payroll software each time you pay someone. You usually give your employee the other three parts (1A, 2 and 3).

A new version of the form introduced in 2009 insists that employers include the employee’s date of birth and gender.

Employers who use HMRC’s free Online Return and Forms – PAYE service can print parts 1A, 2 and 3 of form P45 onto A4 plain paper. This facility is also available in some payroll software packages.

The form should be printed onto white A4 paper, using black ink.

You must give employees a P45 when they stop working for you, as they are entitled one by law.

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