If an employee or pensioner dies
If an employee or someone to whom you pay an occupational pension dies you must complete a form P45 and make any final payment due to the deceased's personal representative. This is usually the executor of their will. The steps you then need to take depend on whether the individual was an employee or a pensioner.
If an employee dies
Make sure that you:
- complete a P45
- write 'D' in the box at the bottom of the form to indicate that it relates to an employee who has died and not just left your business
- send all four parts of the form to us
Note that employers with 50 or more employees must start filing P45s online from 6 April 2009. We expect that employers with fewer than 50 employees will have to file them online from 6 April 2011.
More about employer deadlines for filing PAYE online
National Insurance contributions from the date of death
If an employee has died and a payment is due either on or after the date of death, no National Insurance contributions (NICs) are due on the final payment - neither employer's NICs nor employee's NICs.
Procedure and tax code for final payment
If a payment is made after the date of death but before completion of the P45 use the employee's existing tax code and include the amount in the P45.
If a payment is made after completion of the P45, PAYE tax is deductible using tax code BR (on a week one/month one basis).
You should record the deduction on the employee's form P11 Deductions Working Sheet or equivalent record as follows:
- if the payment is made in the same tax year as the one in which the employee died, record the details on the P11 that you have been using for the employee
- if the payment is made in a later tax year, record the details on a new P11 in the name of the deceased employee
You can use our PAYE tax calculator to work out the PAYE tax to deduct. Unfortunately, however, the P11 Calculator on the Employer CD-Rom cannot currently be used for this purpose.
If a pensioner dies
If someone you have been paying a pension to has died, you should:
- complete a P45
- write 'D' in the box at the bottom of the form
- send all four parts of the form to us
Note that employers with 50 or more employees must start filing P45s online from 6 April 2009. We expect that employers with fewer than 50 employees will have to file them online from 6 April 2011.
More about employer deadlines for filing PAYE online
Procedure and tax code for final payment
If the payment is in the same tax year as when the pensioner died, use their existing tax code. (This applies whether you complete the P45 before or after the payment.)
If the payment is made in a later tax year than the date of death and after completion of the P45:
- use the code BR (on a week one/month one basis)
- record the details on a new P11 in the name of the deceased pensioner
If the payment is made in a later tax year than the date of death but before completion of the P45:
- prepare the P45 using the code which would have been in operation if the pensioner had still been alive
- record the details on a new P11 in the name of the deceased pensioner
Where a payment is made in a later tax year than the date of death the P45 would only show payments made that tax year. Payments made in the tax year of death would be shown on form P14 End of Year Summary.
