A P45 is an official UK tax document issued by an employer when an employee leaves a job, summarising their pay and tax contributions for the current tax year.
Key Takeaways
- A P45 records your earnings and tax paid when you leave a job, ensuring accurate tax treatment with your next employer.
- Your employer must provide a P45 automatically when your employment ends.
- Without a P45, you may be placed on an incorrect tax code and pay too much or too little tax.
- If you don’t have a P45, you can use a new starter checklist instead.
When changing jobs, it can be super exciting starting a new chapter. But in reality, there’s a lot of paperwork and things you need to provide your new employer with, such as a P45. I think we’ve all heard of a P45, but do we all understand what it actually is and why it is so important?
What is a P45?
A P45 certificate is an official document provided by your employer when your employment is terminated with them. You should then provide this document to your new employer. A P45 will include some vital information that your new employer needs including:
- Tax code: the code HMRC assigns to determine how much income tax should be deducted from your pay
- Gross pay: your total earnings before tax and other deductions during your employment
- The amount of tax you’ve paid for the year to date: the total income tax deducted from your pay so far in the current tax year
- Previous employer details: the name and PAYE reference of your former employer
The Four Parts of a P45
A P45 consists of four parts, each serving a specific purpose:
- Part 1: Your employer reports your leaving date and pay details to HMRC through their payroll submission (the Full Payment Submission), rather than posting this part.
- Part 1A: For you to keep for your own records.
- Part 2: Given to your new employer, or to Jobcentre Plus if you’re claiming benefits.
- Part 3: Also given to your new employer to process your tax records.
How do you request a P45?
A P45 isn’t something you should need to request. It should be provided to you automatically when you leave your employer, whatever the reason for leaving. If you haven’t received it before you leave the job or with your final payslip, it’s important to contact the HR team to request it.
How long is a P45 valid for?
A P45 is valid for the tax year in which it was provided. For example, if you receive a P45 in January of a given tax year, it’s only valid until the end of that tax year in April.
If you left your old job in the previous tax year and start your new one on or before 24 May, your new employer can still use the tax code from your P45. They’ll ignore the year-to-date pay and tax figures, though, as these relate to the previous tax year.
Why is a P45 so important?
The reason why a P45 is so important to your new employer is because without it they won’t know how much tax you’ve paid to date, and what your tax code is. This means that you could end up on an incorrect tax code and paying too much or too little tax. Whilst this can be rectified through HMRC, it is still an inconvenience to you when starting your new job.
For employers, accurate P45 information also helps payroll software process tax and pay records correctly from day one.
The P45 also has several functions that aren’t directly related to starting a new job. You’ll need it to fill in a tax return, if required, and claim benefits and tax refunds if you are out of work. Further down the line, you may need to refer to your P45 to ensure you are not overcharged on tax when withdrawing money from a pension.
P45 vs P60: What’s the Difference?
P45 and P60 are both official UK tax documents, but they serve different purposes:
- P45: Issued when you leave a job. It shows your earnings and tax paid up to your leaving date and is given to your new employer.
- P60: Issued at the end of each tax year (by 31 May) to employees still in employment. It summarises your total pay and tax for the entire tax year.
In short, a P45 is for leavers, while a P60 is an annual summary for current employees.
Starting a new job without a P45
Not having a P45 when starting a new job is manageable. Whilst it’s important, it won’t prevent you from beginning your new role. As mentioned above, it can affect the tax you pay, but this can be put right.
If you don’t have a P45, whether it’s your first job, you haven’t worked this tax year, or your P45 has gone missing, you’ll fill in a new starter checklist instead. Your employer uses it to work out your tax code. Try to complete it before your first payday, as otherwise you may be put on an emergency tax code until it’s sorted.
Everything you need to know about employment and HR law!
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Frequently asked questions
Q. Do I need a P45 to start a new job?
A. No, a P45 isn't required to start a new job, but providing one helps make sure you're placed on the correct tax code from day one.
Q. What happens if I lost my P45?
A. If you've lost your P45, you can't get a replacement. Instead, you should complete a new starter checklist for your new employer, and HMRC will update your tax records.
Q. How do I get a P45 from my employer?
A. Your employer should provide your P45 automatically when you leave. If you don't receive it, contact your former employer's HR or payroll department.
Q. Can I claim a tax refund without a P45?
A. Yes, you can still claim a tax refund by contacting HMRC directly, even if you don't have a P45.
