What to do when an employee leaves under the online Real Time Information (RTI) reporting system
If you are operating paper process RTI see our 'paper filing' section.
When your employee leaves you need to:
- enter the date of leaving in your records
- work out the final pay, tax and other deductions to be made
- include the details in the next Full Payment Submission (FPS) you make to HMRC
- give your employee a P45 (your payroll software will probably produce a P45 for you but if not, you can get one from HMRC – we tell you more about this on this page).
A P45 has several parts. You keep part 1. The rest of the P45 is provided so that the employee can have a copy of his pay and tax details for his own records and so that he can give a copy to his new employer. It does not need to be sent to HMRC.
There is no deadline as such, but the P45 must be completed as soon as possible after the employee leaves. Ideally it should be given to them on their last working day, or with their final payslip.
For guidance on the various pay elements that may be due when an employee leaves, e.g. statutory redundancy pay or accrued holiday pay, please see our Employment Law section.
The above list covers straightforward situations. However there can be more complicated issues such as when you have to make a payment AFTER your employee has left and you have given them a P45.
For more guidance on what to do in this scenario and others, see CWG2 – Further Guide to PAYE and NICs (para 1.14).
If you make a payment after you have already issued a P45, essentially you:
- use tax code 0T on a ‘W1/M1’ basis and deduct National Insurance contributions and any Student Loan repayments as normal – unless it’s an ‘irregular’ payment like accrued holiday pay in which case you treat it as a weekly payment.
- report the payment and deductions in your next FPS, using the employee’s original ‘Date of leaving’ and payroll ID, and set the ‘Payment after leaving’ indicator.
- give the employee written confirmation of the payment showing the gross amount and deductions.
- add the additional payment in the ‘Year to date’ field, if the payment is in the same tax year.
The payment should be the only one in the ‘Year to date’ field if it is being paid in the next tax year.
You must never complete a further form P45 or amend a P45.
For more information on what to do when an employee leaves, see GOV.UK.
If you use HMRC’s Basic PAYE Tools PAYE software (BPT), then you can find a guide that gives you step-by-step help on what to do when an employee leaves on GOV.UK. It contain examples of the screens you will see in BPT and simple to follow instructions.