When you start a job, you will need to give your new employer a set of documents including your P45 form. While most people are aware of P45’s many people don’t realise why they are so important. Let’s have a closer look at them in this article.
- What is a P45 Form?
- Why is it Important?
- Who Issues it?
- Do you get a P45 when you Retire?
- Do you get a P45 if you’ve Been Sacked?
- How Long is the Form Valid for?
- What if my P45 is wrong?
- What if I’ve Lost my P45?
- What about a P46?
What is a P45 Form?
A p45 form gives your employer information about how much taxable salary you have paid over the current year. It also shows how much money has been deducted. In addition to this, the P45 shows the tax code you were using when you were in your last job.
The P45 is made up of the following parts:
- Part one which your employer sends to HMRC
- Part one A which is the part of the form you keep
- Part 2 and 3 which should be given to your new employer or the Jobcentre if you have no work.
Your past employer has to issue you with a P45. There is no legal time frame in which it must be issued. However, they are instructed to give the P45 to you on your last day.
Why is a P45 Important?
If you don’t have your P45, you should be aware that your new employer will not be able to assign you the right tax code. You could even end up paying even more tax than you need to. You might also have to pay emergency tax. While HMRC can send you a refund it’s not always that easy to get one.
P45’s are also useful if you need to fill in a tax return. It can also help you to claim benefits. You will also need it to make sure you’re not overcharged tax when you’re withdrawing your pension.
Who Issues a P45?
Your employer issues a P45 when you no longer work for them. If you do not have a P45 when you’re beginning a new job or you’re starting a second job, you’ll need to ensure you know how much tax you should pay.
Your employer will collect all the information and ask you about any student loans or benefits that you receive. This is to ensure they can work out what your tax code should be before you get paid.
Do you get a P45 when you Retire?
If an employee retires on a pension that is paid by the employer, then they should not treat it as they have left their employment. In this case, a P45 will not be necessary. If an employee decides to retire when they can still receive Jobseeker’s allowance the employee will need to give their P45 to their job centre.
Do you get a P45 if you’ve Been Sacked?
Yes, you will get a P45. However, you should not expect to receive it before your next pay day or when you would have been paid. If you were paid weekly, you should expect to receive it within two weeks. If you were paid monthly, you should expect to receive it by the end of the second month.
How Long is a P45 Valid for?
A P45 is valid through the tax year. This is the tax year in which the P45 was provided. However, you should not throw it away straight away. Your P45 should remain in your possession for at least 2 years after the tax year in question. If you wish to keep it for longer, you should. This is because HMRC can pursue tax investigations for up to 2 decades after the tax year in question.
What if my P45 is wrong?
If your P45 is incorrect it cannot be corrected. Asking your employer to amend it will not work as they are unable to edit it. HMRC state that it cannot be edited as they wish to prevent fraud.
The good news is there are a few options for those who have a p45 that contains incorrect information.
- You can complete HMRC’s Starter Checklist form.
- You should give it to your new employer when you hand them your P45.
- You can mention on the checklist that your address, date of birth or other details are incorrect.
What if I’ve Lost my P45?
If you have lost your P45, your employer will not be able to supply you with another one. However, you can get their tax registration number. What you’ll need to do next is call HMRC and give them your National Insurance number and your start date. They will send a statement to your new employer. This is to ensure that you are not made to pay emergency tax.
What about a P46?
When you leave your job, you will be given your P45. If they cannot give you a P45, your new employer will ask you to fill in a P46 form. Your new employer might not have received your P45 from your old employer. It might also have been lost. You might also be starting your first job after finishing school or you might have been unemployed for a long time.
A P46 can help your new employer decide which tax code they should use. Your P46 will need to be filed online and 3 statements are needed to form it. The employee will need to tick the option that suits their circumstances. This statement will help HMRC decide which tax code they need to use.