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

If an employee dies, you must complete a form P45.

If you are completing an electronic version of form P45, mark the relevant box to indicate that the employee has died, and then file Part 1 online to HM Revenue & Customs (HMRC). If your software automatically produces Parts 1A, 2 and 3 of the form you should destroy them – there is no need to send them to HMRC.
If you are completing a paper version of the form, write 'D' in box 14 at the bottom (to indicate that it relates to an employee who has died) and send all four parts of the form to HMRC.

Note that employers with 50 or more employees must now file form P45 online. And under government proposals, employers with fewer than 50 employees will have to file their P45s online from 6 April 2011 – but you can start to file online as soon as you wish.

More about filing form P45 online

National Insurance contributions on or after 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.

PAYE tax after the date of death

If you make a payment after the date of the employee’s death but before completing their P45, use the employee's existing tax code and include the amount in the totals summarised on the P45.

If you make a payment after completion of the P45, then 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 payroll 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 payroll record that you have been using for the employee
if the payment is made in a later tax year, record the details on a new payroll record in the name of the deceased employee

You can use HMRC’s PAYE tax calculator to work out the PAYE tax to deduct from a final payment that’s made after completion of form P45. If you use commercial payroll software, check with your software provider whether the package you use will complete these calculations automatically for you.

Unfortunately, the P11 Calculator on HMRC’s Employer CD-ROM cannot currently be used to calculate the PAYE tax due on a payment that’s made after a deceased employee’s P45 has been completed. If this situation arises and you’ve been using the P11 Calculator to maintain the employee’s payroll records, you’ll need to transfer their details to a paper form P11 or to commercial payroll software and finalise their records in that way.

Use the PAYE tax calculator

Using payroll software or the P11 Calculator – find out more

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If a pensioner dies

If someone to whom you’ve been paying a pension dies, you must complete a form P45.

If you’re completing an electronic version of form P45, mark the relevant box to indicate that the pensioner has died, and then file Part 1 online to HM Revenue & Customs (HMRC). If your software automatically produces Parts 1A, 2 and 3 of the form you should destroy them – there is no need to send them to HMRC.
If you’re completing a paper version of the form, write 'D' in box 14 at the bottom (to indicate that it relates to a pensioner who has died) and send all four parts of the form to HMRC.

More about filing form P45 online

PAYE tax after the date of death

If your final payment to the pensioner is in the same tax year as the date of death, use the employee’s existing tax code. (This applies whether you complete form P45 before or after the final payment.)

If the payment is made in a later tax year than the date of death but before completion of the P45:

use the tax code for the new year that you would have used if the pensioner had still been alive
record the payment details on a new form P11 or equivalent payroll record in the name of the deceased pensioner
complete form P45 using the new tax code and only showing payments made in the new tax year – payments made in the earlier tax year will be recorded on the employee’s P14 End of Year Summary for that year.

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 or equivalent payroll record in the name of the deceased pensioner

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