Payroll

What is P45?

A P45 is a form you get when you leave a job, showing your earnings and tax paid so far in the tax year.

Example

Leave job in October. P45 shows £24,000 earned and £2,800 tax paid Jan-Oct.

Key Dates

Give to new employer or keep for Self Assessment

How P45 Works in Practice

A P45 is the form your employer gives you when you leave a job. It is a critical document in the PAYE system because it transfers your cumulative pay and tax information from your old employer to your new one, ensuring continuity of your tax position throughout the tax year. Without it, your new employer cannot accurately calculate your tax and may put you on an emergency tax code.

The P45 has four parts. Part 1 is sent by your former employer to HMRC. Parts 1A and 2 are given to you. Part 3 is given to your new employer. The form contains your tax code, your total pay and total tax in the current tax year up to your leaving date, your leaving date, and your employer's PAYE reference. If you are starting a new job, you hand over Part 3 to your new employer so they can set up your payroll correctly.

Your employer must issue a P45 on or before your final payment. In practice, it may take a few days after your last day, depending on payroll processing. The P45 figures must match the final RTI (Real Time Information) submission your employer made to HMRC. If they do not match, it can cause complications with your tax code at your next employer.

If you do not have a P45 when starting a new job -- for example, it is your first job, you are coming from self-employment, or your old employer has not issued one -- your new employer will ask you to complete a Starter Checklist (which replaced the P46 form). This helps HMRC determine the correct tax code, but you may initially be placed on a temporary code that could result in over-deduction of tax.

Step by Step

When you leave employment, your employer processes your final pay run through their payroll software and submits a leaver notification to HMRC via RTI. The payroll system then generates your P45, which captures the cumulative totals from the final Full Payment Submission. Your employer must provide this to you and cannot withhold it regardless of any dispute.

When you give Part 3 to your new employer, they use the cumulative pay and tax figures to set up your payroll correctly. The new employer picks up where the old employer left off, ensuring your tax-free allowance is applied consistently across the full tax year. This prevents you from being under or over-taxed.

If you do not start a new job and instead claim benefits, you should give your P45 to Jobcentre Plus. If you become self-employed, keep your P45 for your Self Assessment records. If you have multiple jobs and leave one but keep another, you still receive a P45 from the job you left.

Practical Tips

Hand your P45 to your new employer on your first day to avoid emergency tax codes and ensure your tax-free allowance transfers correctly
Keep a photocopy or photograph of your P45 before handing it over -- you may need the figures for your Self Assessment return
If you are between jobs, keep your P45 safe -- you will need it when you start your next role, even if months later
As an employer, ensure your payroll software issues P45s promptly when employees leave to avoid HMRC penalties

Common Mistakes to Avoid

Not providing your P45 to a new employer promptly, resulting in emergency tax deductions that can take months to correct
Losing your P45 and not informing your new employer or HMRC -- they can use a Starter Checklist but the process is slower
Assuming your old employer can withhold your P45 as leverage in a dispute -- they are legally required to issue it
Not checking the P45 figures match your records -- errors in cumulative pay or tax carry forward into your new employment

Frequently Asked Questions

What do I do if I do not receive a P45?

Contact your former employer and request it. They are legally obligated to issue one. If they refuse or have gone out of business, tell your new employer and complete a Starter Checklist instead. You can also contact HMRC to help resolve the issue.

Do I need a P45 if I am becoming self-employed?

You do not need to give it to anyone, but keep it for your records. The earnings and tax figures on the P45 will be needed when you complete your Self Assessment return at the end of the tax year.

Can I get a P45 from a job I left months ago?

Yes, your former employer should still be able to issue one. If they cannot, HMRC will have the information from the employer's RTI submissions and can provide it via your Personal Tax Account.

What if the figures on my P45 are wrong?

Contact your former employer immediately to get a corrected version. Incorrect P45 figures will cause your new employer to deduct the wrong amount of tax. If your former employer cannot be reached, contact HMRC directly.

Do directors get a P45 when they resign?

Yes, if a director is on the company payroll, a P45 must be issued when they cease to be employed. If the director is also a shareholder, this does not affect their shareholding -- only the employment relationship ends.

Source: HMRC guidance on P45: https://www.gov.uk/paye-forms-p45-p60-p11d and PAYE Manual (PAYE70055): https://www.gov.uk/hmrc-internal-manuals/paye-manual

Related Terms

P60

A P60 is an annual summary of your earnings and tax paid from a job, given to you by your employer after the tax year ends.

PAYE (Pay As You Earn)

PAYE is the system employers use to deduct Income Tax and National Insurance from employee wages before paying them.

Tax Code

Your tax code tells your employer how much tax-free income you can have before they start deducting tax from your pay.

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