A P45 is a document that UK employers must issue to an employee when they leave a job. It records the employee’s pay and tax details for the current tax year up to their leaving date and is used by the next employer to set up the correct tax code and continue PAYE deductions without interruption.
What a P45 Contains
The P45 has four parts and contains the following information:
| Field | Description |
|---|---|
| Employer’s PAYE reference | The leaving employer’s HMRC reference |
| Employee’s name | Full name as recorded on payroll |
| National Insurance number | Employee’s NI number |
| Leaving date | Date employment ended |
| Tax code at leaving | The PAYE tax code in use |
| Total pay in the tax year | Cumulative gross pay up to the leaving date |
| Total tax deducted in the tax year | Cumulative income tax deducted up to the leaving date |
| Student loan plan type | If applicable, the student loan plan |
| Week 1/Month 1 indicator | Whether a non-cumulative tax code was in use |
The Four Parts
| Part | Who Receives It | Purpose |
|---|---|---|
| Part 1 | Sent to HMRC by the employer | Notifies HMRC of the leaver (sent via RTI) |
| Part 1A | Kept by the employee | Employee’s own record |
| Part 2 | Given to the new employer (or kept by employee) | New employer sends to HMRC if needed |
| Part 3 | Given to the new employer | New employer uses to set up PAYE |
In practice, Part 1 is now submitted electronically through the leaver information on the Full Payment Submission (FPS) in RTI. The employer still provides Parts 1A, 2 and 3 to the employee.
When Must a P45 Be Issued
The employer must issue the P45 on or shortly after the employee’s last day of employment. There is no specific statutory deadline stated in days, but HMRC expects it to be provided promptly.
Triggering Events
A P45 must be issued when:
- An employee resigns and leaves
- An employee is dismissed or made redundant
- A fixed-term contract ends
- An employee retires
- An employee dies (the P45 is sent to the personal representative)
- A casual or temporary worker’s engagement ends
A P45 is not issued when:
- An employee goes on maternity, paternity or adoption leave (they remain employed)
- An employee is on long-term sick leave receiving SSP
- An employee transfers under TUPE regulations (the new employer inherits the PAYE record)
How the New Employer Uses a P45
When a new employee provides a P45, the new employer uses the information to:
- Set up the employee’s tax code — using the code shown on the P45
- Record the cumulative pay and tax — entering the year-to-date figures so PAYE operates on a cumulative basis
- Submit starter information on the first RTI FPS — including the P45 data and a starter declaration
- Apply the correct student loan plan if indicated
This ensures the employee pays the right amount of tax from their first payday in the new job, avoiding over- or underpayment.
Tax Code Continuity
The key benefit of the P45 is tax code continuity. Without it, the new employer would have to use a Starter Checklist and potentially apply an emergency tax code, which may result in the employee paying too much or too little tax until HMRC issues the correct code.
What Happens Without a P45
If a new employee cannot provide a P45, the employer must ask them to complete a Starter Checklist (formerly P46). The checklist asks:
- Whether this is their first job since 6 April
- Whether they have another job or receive a pension
- Whether they have a student loan
Based on the employee’s answers, the employer applies one of three tax codes:
| Statement | Tax Code Applied |
|---|---|
| A — First job since 6 April, no other income | Emergency tax code (standard allowance on a cumulative basis) |
| B — Only job now, but had one since 6 April | Emergency tax code on a non-cumulative (week 1/month 1) basis |
| C — Has another job or pension | BR (basic rate, no allowance) |
If the employee does not complete a Starter Checklist, the employer must use the emergency tax code on a non-cumulative (week 1/month 1) basis, which gives the standard monthly or weekly tax-free amount but does not allow any catching up of earlier under-deductions.
P45 and Redundancy
When an employee is made redundant, the P45 shows:
- Pay and tax up to the leaving date
- Redundancy payments are not always shown on the P45 — the first £30,000 of a genuine redundancy payment is tax-free and may be processed separately
- Taxable elements of the redundancy package (such as payment in lieu of notice) are included in the P45 figures if processed through payroll
P45 and the Final Payslip
The P45 figures should match the cumulative totals on the employee’s final payslip:
| P45 Figure | Should Match |
|---|---|
| Total pay in tax year | Cumulative gross pay on final payslip |
| Total tax deducted | Cumulative tax on final payslip |
| Tax code | Tax code on final payslip |
Any discrepancy suggests an error in the payroll calculations that should be investigated and corrected before the P45 is issued.
P45 vs P60
| Feature | P45 | P60 |
|---|---|---|
| When issued | When employee leaves | After 5 April (tax year end) |
| Covers | Start of tax year to leaving date | Full tax year |
| Purpose | Enables tax continuity at new employer | Year-end summary of pay and tax |
| Who receives it | Leavers | Employees still on payroll at 5 April |
If an employee leaves on 5 April itself, they receive a P45 (not a P60), because they were not on the payroll at the end of the day on 5 April.
P45 and HMRC Notification
When the employer submits the leaver’s final FPS through RTI, HMRC is notified that the employee has left. The FPS includes:
- The leaving date
- The reason for leaving (if applicable)
- The employee’s cumulative pay and tax figures
- Whether SSP or SMP was being paid
HMRC uses this data to update the employee’s tax record and, if necessary, issue a new tax code to the next employer.
Multiple P45s in a Tax Year
An employee who changes jobs several times in a single tax year will accumulate multiple P45s. Each P45 only covers the period with that particular employer. The cumulative tax position is managed through:
- Each new employer using the previous P45 to set up PAYE correctly
- HMRC reconciling all employments through RTI data
- A final P60 from the employer where the employee is working at 5 April
Record Keeping
For Employers
Employers must keep records of P45s issued for at least 3 years after the end of the tax year. This includes:
- The leaver’s details and leaving date
- The pay and tax figures reported
- The tax code in use at leaving
- Copies of the FPS showing leaver information
For Employees
Employees should keep their P45 (Part 1A) for their own records. It is useful for:
- Tax return purposes — especially if completing Self Assessment
- Verifying tax paid if HMRC queries arise
- Proving employment history
- Supporting benefit claims
Common P45 Issues
| Issue | Resolution |
|---|---|
| Employer delays issuing P45 | Employee can ask HMRC to intervene |
| Incorrect figures on P45 | Employee should ask the former employer to correct and reissue |
| Lost P45 | New employer uses Starter Checklist; HMRC adjusts the tax code |
| P45 from previous tax year | Not valid for current year; new employer uses Starter Checklist |
| P45 shows emergency tax code | New employer uses it as shown; HMRC may issue updated code |
P45 and Accounting
From the employer’s perspective, issuing a P45 triggers several accounting actions:
- Final salary payment processed through payroll with all deductions
- Outstanding holiday pay calculated and paid
- Any contractual payments (notice pay, bonuses) processed
- PAYE liability updated for the final period’s tax and NICs
- Pension contributions finalised and paid to the pension provider
- RTI FPS submitted with leaver information
- Employee removed from ongoing payroll after the final run
The employer’s accounting records should show a clean separation of the leaver’s final costs and the cessation of ongoing salary accruals.