Taking on a new employee - employee gives you a form P45 late

There are special steps you need to take in the circumstance, to make sure that you are using the correct tax code for your employee and that your payroll records are updated correctly.

On this page:

Employee gives you a P45 after you have completed a form P46

If an employee gives you a P45 after you have completed a form P46 but before their first payday, the action you'll need to take will depend on whether or not you have received a new tax code from HMRC since your employee started with you.

New tax code received from HMRC since employee started

You should:

  • Continue to use the code received from HMRC.
  • If the student loan indicator is shown on the P45, start deducting student loan repayments, unless you have received notification from HMRC to stop.
  • Destroy the P45 Part 3 - do not include the pay and tax figures shown on it in your tax calculations. The new code received from HMRC, together with any pay and tax included, replaces the form P45 Part 3.

New tax code not received from HMRC since employee started

You should:

  • use the code on the P45 Part 3 providing it is for the current tax year - and carry out the same checks as described in the guide 'Taking on a new employee - dealing with form P45'
  • if the P45 Part 3 includes previous pay and tax details and your checks confirm these are correct, add them to any pay and tax details since the employee started working for you
  • if this results in less tax being due to date than the total deducted so far, repay the difference to your employee
  • if the student loan indicator is shown on the P45, start deducting student loan repayments unless you have received notification from HMRC to stop

Taking on a new employee - dealing with form P45

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Employee gives you form P45 after their first payday

If an employee gives you a P45 after their first payday and you've already received the employee's tax code from your Tax Office, destroy the P45.

If you've haven't yet received a tax code for them proceed as follows:

If you use commercial payroll software

Check the P45 figures manually, or use your payroll software pay to do this, and then decide which tax code to use by following the instructions in the guide 'Taking on a new employee - dealing with form P45'.

Follow the instructions on your software to update your employee's details - most payroll packages should do this for you automatically but you'll need to check this.

If you use the P11 Calculator

If you use the P11 Calculator on the Basic PAYE Tools you'll need to:

  • check the P45 figures using the P45 checker, part of the Basic PAYE Tools
  • decide which tax code to operate by following the instructions in the guide 'Taking on a new employee - dealing with form P45'
  • enter the employee's new tax code in the employee database
  • adjust the employee database entries for the week they started to reflect the 'Gross pay' and 'Total tax to date' figures from the P45, or use the correct ones if the P45 check found errors

Taking on a new employee - dealing with form P45

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Guidance for employers using a paper form P11

If you complete a paper form and the employee gives you P45 with a week one/month one tax code after their first payday

You must check the P45 before you make any entries on the paper P11.

If the employee gives you a P45 with a week one/month one tax code after their first payday, enter 'nil' as the previous pay and tax details in columns three and six of the P11 on the line above the one you will use for the employee's first payment.

Remember - if you've already received a tax code from HMRC by the time your employee gives you their P45, destroy their old P45 and use the tax code HMRC has sent you instead.

If you complete a paper P11 and the employee doesn't have a week one/month one tax code

Unless the employee's P45 shows a week one/month one tax code - enter in column 3 of the P11 on the line immediately above the one you used for the employee's first payment the 'Total pay to date' shown at item seven of the P45 (use the correct amount if the P45 check found any errors).

Similarly, in column six on the line immediately above the one you used for the employee's first payment enter the P45 'Total tax due' figure shown at item seven (or the correct amount if the P45 check found any errors).

On the next payday include these amounts in the 'Total pay to date' and 'Total tax due' figures that you enter at columns three and six of the P11.

The entries in columns three and six will now be fully up to date and correct to carry forward.

Example: updating a paper form P11

An employee without a P45 starts in week 34 and you ask her to complete a P46. She completes the P46 and ticks statement B. In accordance with the P46 instructions you start to operate an emergency code on a week one/month one basis (810L X).

  • In weeks 34 and 35 you pay her £700 and enter this amount on the P11 at column two for each of those weeks ('Pay in the week or month').
  • In weeks 34 and 35 you deduct tax of £108.80 and enter this amount on the P11 at column 7, Tax deducted or refunded in the week or month, for each of those weeks.

Before the next payday, week 36, the new employee gives you her P45 which shows that:

  • her tax code is 810L, emergency code on a cumulative basis
  • she has already received £13,000 of pay to date this tax year
  • she has already paid tax of £1664.20 this tax year

You check the date of the P45 and the figures - everything is correct.

In order to update the P11 to take account of the newly received P45 figures you proceed as follows:

  • at week 33 (the week before the employee started) in column three ('Total Pay to date') you enter £13,000
  • at week 33 (again the week before the employee started) in column six ('Total tax due date') you enter £1664.20

At week 36, the first payday since you received the P45, you make your next payment and further update the P11 as below:

  • you pay the employee £700 at week 36 and enter this amount at column two
  • you then add up all the pay figures from column two and enter the 'Total pay to date' into column three - this is £13,000 (from the P45) + £700 (week 34) + £700 (week 35) + £700 (week 36) = £15,100
  • next you work out what the total tax due to date on £15,100 should be at week 36
  • this comes to £1897.00 arrived at as follows: £15,100 less free pay of £5614.20 (155.95 x 36) = £9485.00, which is taxable at 20 per cent = £1897.00.
  • you enter £1897.00 at week 36 column six ('Total tax due to date')

Finally you need to calculate what tax, if any, is actually due at week 36 taking into account what has already been deducted so far. You work this out as shown below:

  • £1897.00 (total tax due on £15,100) less £1664.20 (tax shown as already paid on the P45) less £108.80 (deducted at week 34) less £108.80 (deducted at week 35) = £15.20 due for week 36
  • you therefore enter £15.20 at week 36 column seven ('Tax deducted or refunded in the week or month')
    Your P11 entries are now fully up to date and correct to carry forward.

Claim funding for a tax refund for your employees

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