What is Form P45? Your P45 Explained

A P45 form is a statement that shows how much tax you’ve paid on your salary so far in the tax year.

Whenever an individual leaves a job, their employer is obligated to provide them with a P45 after they have left.

The P45 (details of employee leaving work) is the way your new employer finds out your payroll and tax information.

Form P45 is unique to you and includes your national insurance number, tax code and figures relating to your pay and tax up to that point in the year.

Understanding the meaning behind your P45 figures and what to do with the different P45 parts is important to avoid paying emergency tax and it keeps your tax record up to date for other reasons.

Why do I need a P45?

A P45 is important in a variety of circumstances including:

• Changing jobs: A P45 is important because it tells your next employer information to make sure you don’t overpay or underpay tax.
• Claiming benefits: If you aren’t starting a new job giving the DWP your P45 is usually requested when claiming benefits like jobseekers allowance.
• Pension provider: If you’ve recently ceased employment and are about to commence your pension, you should give your P45 form to your pension provider.
• Self assessment tax return: If you complete a tax return you should enter your P45 figures in the relevant employment section of your return.

You should keep a copy of your P45 for six tax years just in case you need it in the future. Keeping a copy of your final payslip is also recommended because your P45 doesn’t show figures relating to national insurance or pension contributions.

What figures are on a P45?

The figures entered on your P45 are in the most self explanatory and include:

• Dates you started and left that employment.
• Total gross income during that particular employment.
• Total tax paid up to the date of leaving employment, or the date that a benefit claim ceased.
• Total gross income and tax paid from income previously received in that tax year.
• Student loan payments if applicable.
• Previous employers PAYE tax reference number.

A P45 helps to keep your tax records up to date and the figures should be checked to ensure they are correct, as mistakes can be made.

What should I do with my P45?

When you get your P45 it’s good to know what to do with each part because there are four of them:

• P45 Part 1a is to be kept by you for your own records.
• P45 Part 1 is passed on by your last employer directly to HMRC.
• P45 Part 2 and 3 are given to your new employer (or benefits office) who will keep one and send the other to HMRC.

Holding on to the right part of your P45 and passing on what you should to your new employer is an easy way to keep your tax record up to date.

How do I get a P45?

Your employer has to provide you with P45 either in a paper format or electronically.

The P45 can only be generated after you have finished working and is normally given to you automatically often with your last payslip.

Employers who don’t provide a P45 form to their employees risk HMRC penalties.

Form P45 and your tax code

One of the most important details on your P45 is your tax code. Your new employer uses the tax code from your P45 to deduct the correct amount of tax from you.

If your employer doesn’t have the P45 tax code they’ll usually apply an emergency tax code which generally results in higher tax deductions until HMRC provides your employer with the appropriate code.

Often if you’re subject to emergency tax you could be eligible for a tax refund but only after HMRC has the information they need to give your employer the right tax code.

P45 tax refund

A P45 can be essential to help you avoid paying emergency tax when you start working with a new employer.

Emergency tax can be refunded (often automatically) in the future after your record has been adjusted by HMRC and your employer.

If you have stopped employment and don’t intend on receiving any further taxable income (including benefits or pension income) in that tax year you could be owed a tax refund.

Having all of your up to date P45 information on record in the year you stop work is necessary for HMRC to calculate and pay any refund of income tax you are owed back.

Can I get a copy P45?

If you need a copy of your P45 it’s possible to ask for a new one from your previous employer.

Most employers are usually capable of supplying a substitute P45, especially if they initially delivered it electronically.

In some instances your past employer might not be able to give you a copy P45 particularly if your employment with them ended quite some time ago.

HMRC are unable to give you a copy of your P45 but the information contained on the P45 should show online in your personal tax account or your HMRC app

P45 and the starter checklist

If you are starting a new job and you don’t have your P45 your new employer can ask you to complete a starter checklist which has replaced the HMRC form P46.

The starter checklist in most cases can replace some or all of information needed to update your payroll record to make sure you’re your take home pay isn’t negatively impacted by emergency tax deductions.

P45 leaving the UK

Taxpayers who leave the UK can be owed a tax refund in the tax year in which they stop work.

This is usually because they won’t receive the full benefit of their personal allowance in that tax year.

If you don’t complete a self assessment tax return in the UK you should complete a P85 form which asks you to include parts 2 and 3 of your P45.

Including your P45 when submitting your P85 allows HMRC to calculate and repay any overpaid tax in the quickest time possible.

Check your P45 for errors

It’s crucial to verify the accuracy of the details on your P45 because your new employer and HMRC accept the information as correct.

Any errors or discrepancies could result in miscalculated taxes and potential complications with your tax record in the future.

For workers incorrect data on their P45 could lead to an overpayment or underpayment of income tax with extra paperwork, time and effort needed to correct it.

If you find any incorrect details you should contact the employer that gave you the P45 so they can reproduce an accurate P45 for you and HMRC.

Is a P45 the same as a P60?

While a P45 and a P60 share some similar information they are not the same with each serving different purposes.

Form P45 is only produced when you leave a job, whereas a P60 is issued annually after the end of each tax year for every employment you have.

The form P60 is automatically generated by employers and pension providers and delivered to both employees and HMRC usually in April or May each year.