Employees with a P45

The instructions on this page are only for you if HMRC have agreed you qualify to file on paper.

Paper filing means that you send the information about your employee and the payments you make to them to HMRC on paper. The process described in this section, for new joiners who bring a form P45 (sometimes also known as an employee’s leaving statement) from their last employment, applies under the RTI paper process from 6 April 2014.

Under the old style paper process, HMRC were alerted to the presence of a new employee by the completion of a separate form. The key thing to note about the RTI paper process, is that new starters are notified to HMRC via the main RTI submission – there is no separate paperwork to send to HMRC.

Taking on a new employee
Starter declaration
Checking your employees P45
What to do if you employee gives you a P45 late
Final steps

Taking on a new employee

All employees who come to you from another job, or from a period on state benefits, should bring with them a completed form P45. The P45 contains the employee’s personal details and details of the pay they have received and tax that has already been deducted from the start of the tax year, to the date the last employment/period on state benefits ended. The P45 also contains the employee's student loan position, leaving date and, importantly, the tax code operated by the previous employer.

These details are important as they provide a link for the operation of PAYE from one employer to another and will be needed to run your employee’s payroll properly. HMRC have a help sheet for noting down all this employee information, called an RT11 deductions working sheet.

HMRC should send all the forms and guidance you will need, including RT11, to you – they are not available from HMRC’s website. Otherwise they are available from the Employer Orderline to those employers who HMRC have agreed can use paper forms. Form RT11 does not need to be sent to HMRC as it is just part of your own working papers, however the information in it will help you complete form RT2 (full quarterly payment summary) each quarter, which does need to be sent to HMRC.

Make sure the personal information that you take down from the P45 is accurate (National Insurance number, full name, gender, date of birth and so on) as this is used by HMRC to match a new employment to the individual’s PAYE record. (Indeed, you should verify it againt an official source such as birth certificate, pasport, driving licence or official documents from HMRC.

You should also check the P45 for a student loan indicator – if a new employee is repaying a student loan you will need to ask which plan type the employee is repaying under. Form P45 will only indicate whether a new employee is already repaying a student loan. It will not indicate a plan type.

Note that even if your new employee has a P45, the starter declaration will still need to be completed. 

An employee may not be able to give you a P45 if

  • they have lost it,
  • this is their first job, or
  • they are continuing in an existing job as well as working for you

in which case a different procedure will help you collect the information that you need.

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Starter declaration

HMRC will require some information to be given to them about your employee’s previous employment circumstances in the first RT2 that you complete after taking them on – this is whether or not the employee has a P45.  There are different statements that could be given to HMRC about your employee’s previous employment circumstances:

A. This is their first job since last 6 April and they have not been receiving taxable Jobseeker's Allowance, Employment and Support Allowance, taxable Incapacity Benefit, state pension or occupational pension.

B. This is their only job, but since last 6 April they have had another job, or have received taxable Jobseeker's Allowance, Employment and Support Allowance or taxable Incapacity Benefit. They do not receive state or occupational pension.

C. They have another job or receive a state or occupational pension.

Mostly the employer selects the starter statement, however where they left their last job before 6 April 2015, the employee must choose the starter declaration category themselves – see the section below for more details on this.

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Checking your employees P45

Where the details on the P45 relate to the current tax year, you should follow these steps:

  1. The tax code and total pay to date figure from the P45 should be noted down on RT11 as they will be important for working out your employee’s tax deductions going forward.
  2. The correct amount of tax due to date based on the total pay to date figure from the P45 should be calculated again by you. You should not just copy it over from the P45 in case there has been a mistake by the previous employer which could then be made worse by you. Phone the dedicated Employer helpline (0300 200 3205) and ask them to check the 'Total tax to date' figure if you need help.
  3. Once you have calculated the correct amount of tax due to date you should enter it on the RT11. Where the employee has a W1/M1 tax code, ‘nil’ should be entered for the previous pay and tax details.

Where the P45 is for the tax year immediately preceding the current one, you should not automatically use the tax code shown on the P45 and may have to operate what is known as an ‘emergency’ tax code on a week1/month1 (W1/M1) basis until a new code is issued. Nil should be entered on the RT11 for the previous pay and tax details.

The table below shows you what tax codes to use in the different scenarios:

Employee's date of leaving on P45

Employee's start date with you

Tax code on P45

Starter Declaration declared by employee

Starter Declaration to be selected by employer

Tax code to use

6 April 2016 to 5 April 2017

On or after 6 April 2016

Code other than BR, 0T or D prefix

Not needed

B

 Use the tax code on the P45

6 April 2015 to 5 April 2016

6 April 2016 to 24 May 2016

Code other than BR, 0T or D prefix

Not needed

B

Use the tax code on the P45 – add budget increase of 40 to any code ending in L – for example 1600L becomes 1100L (but do not carry forward any week1/month 1 markings from the P45)

6 April 2015 to 5 April 2016

On or after 25 May 2016

Code other than BR, 0T or D prefix

Not needed

B

Emergency code 1100L on a week 1/month 1 basis

Any of above dates

Any of above dates

Code BR, 0T or D prefix

Not needed

C

Use the tax code on the P45


If the date of leaving on your new employee's P45 is 5 April 2015 or before, you will need to ask your employee to decide which of the starter declarations fits their current employment situation to help you work out what tax code to use. 

This information from your employee needs to be recorded (you can use HMRC’s template on GOV.UK here to do this or they can provide this in a way that best suits you, for example in an email, on your own stationery – it is up to you to decide whether or not you need a signature) and kept safe for the current and previous three tax years. See our record keeping section for more information.

The table below shows you what tax codes to use in the different scenarios. ‘Nil’ should be entered on the RT11 for the previous pay and tax details.

 

Employee's date of leaving on P45

Employee's start date with you

Tax code on P45

Starter Declaration declared by employee

Tax code to use

Before 6 April 2015

On or after 6 April 2016

Tax code on P45 not to be used

A

1100L

Before 6 April 2015

On or after 6 April 2016

Tax code on P45 not to be used

B

1100L on a week 1/month 1 basis

Before 6 April 2015

On or after 6 April 2016

Tax code on P45 not to be used

C

BR

Before 6 April 2015

On or after 6 April 2016

Tax code on P45 not to be used

None

0T on a week 1/month 1 basis

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What to do if your employee gives you a P45 late

If HMRC have sent you a tax code

Use the tax code that HMRC have sent you if your employee gives you a P45 after you’ve first paid them (although the instruction is to then destroy the P45 there is no harm in retaining a copy on the employee’s payroll file). You should check whether there is a student loan indicator on the P45, if there is you should commence deductions, if you haven’t already. 

If HMRC haven’t sent you a code

Use your employee’s P45 to work out their tax code, as described above, and update their details in your payroll records.

If your employee left their last job after 5 April 2016, you should also update both the ‘Total pay to date’ and ‘Total tax to date’ fields in your payroll records, as described here. Phone the dedicated Employer helpline (0300 200 3205) and ask them to check the 'Total tax to date' figure if you need help.

Final steps

The form P45 has several parts. The previous employer should have given three parts of the P45 to the employee. The employee will keep part 1A of the P45 for their own record keeping purposes and give parts 2 and 3 of the form to you – their new employer. You should keep part 2 and 3 for your own record keeping purposes. You do not need to send any parts of the P45 to HMRC.

Instead, you will send details of your new employee to HMRC on your next RT2 (which will also include their pay and tax since starting). As this is a form that only gets submitted once a quarter, but you might pay your employee every week or month, you will need to set up your payroll (i.e. gather all the information, fill out help-sheet RT11, etc.) and make payments to your employee in advance of completing RT2.

We have only given a brief outline here of the first steps to take. More detailed information is provided by HMRC in guide RT7 Guidance for employers exempt from filing Real Time Information online.

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