Tag: P45

Paying an employee after giving them a P45

You need to tell HM Revenue and Customs (HMRC) when one of your employees leaves or retires, and deduct and pay the right tax and National Insurance.

You must give your employee a P45 when they leave.

Paying an employee after giving them a P45

If you have to pay an employee after they leave (including someone you’re giving a taxable redundancy payment over £30,000):

  • use tax code 0T on a ‘week 1’ or ‘month 1’ basis (use the code S0T if they’re taxed at the Scottish rate or C0T if they’re taxed at the Welsh rate)
  • deduct National Insurance (unless it’s a redundancy payment) and any student loan repayments as normal – but if it’s an ‘irregular’ payment like accrued holiday pay or an unexpected bonus, 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’s being paid in the next tax year.

You must not give the employee another P45

Closing your PAYE Scheme

You need to tell HM Revenue and Customs (HMRC) straight away if you stop employing people.

Closing your PAYE scheme

You need to submit a final payroll return – either a Full Payment Submission (FPS) or Employer Payment Summary (EPS). You should:

  • deduct and pay any outstanding tax and National Insurance to HMRCwithin 17 days (or 14 if you’re paying by cheque)
  • select the ‘Final submission because scheme ceased’ box
  • put the date you closed your PAYE scheme in the ‘Date scheme ceased’ box – you can’t put a date in the future

You also need to:

  • send your expenses and benefits returns
  • enter a leaving date on each employee’s payroll record
  • give your employees a P45 on their last day – most payroll software can produce a P45 for you or you can order them from HMRC

If you start employing anyone in the same or next tax year, you should reopen your PAYE scheme by sending an FPS with your PAYEreference.

If you temporarily stop employing staff

Your PAYE scheme continues to run if you stop employing staff for less than a whole tax year (eg if you run a seasonal business). You don’t need to give your employees a P45 if you keep them on your payroll.

More details can be found here

PAYE Forms: P45

The P45 is a certificate which contains earnings and tax payments over the financial tax year up until when an employee leaves a job, and it is issued to employees by the employer. Form P45 shows how much tax has been paid on their salary for the current tax year.

You must give all employees a P45 when they stop working for you. You can either:

You can’t download blank P45 forms

Lost P45

You can’t get a replacement P45.  Instead, you can use a ‘Starter Checklist’ (link below) or ask your employee for the relevant details about their finances to send to HM Revenue and Customs (HMRC)

Use this form if you’re an employer and need to record information about a new employee for PAYE