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The form P45 gives you the information you need to make sure you use the right tax code and deduct the right amount of tax and from an employee's pay.
If your employee doesn't have a P45 you need to decide which tax code to use for your new employee. This is based on your employee's employment circumstances. You also need to tell HM Revenue & Customs (HMRC) that you have a new employee.
There could be several reasons for your new employee not having a P45, including:
If your employee gives you a form P45 after you have notified HMRC, then read our guide 'Taking on a new employee - employee gives you a form P45 late'.
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If your employee doesn't give you a form P45 you should notify HMRC that your employee has started with you and what tax code you are using in the absence of a form P45. The only exceptions to this are:
In all other circumstances follow the steps in this guide.
Almost all employers must file starter information online.
Your employee must provide you with certain information to enable you to use the right tax code and deduct the right amount of tax and National Insurance contributions (NICs) from an employee's pay.
They can provide this in a way that best suits your business, for example in an email or on your own stationery. It's up to you to decide whether or not you need a signature.
You can collect this information from your employee by using a form P46 which you can ask your employee to complete. If you use the P46 to gather information please ensure your employee gives it back to you and does not send it to HMRC. The P46 has two sections:
If you choose to use your own method of gathering this information the next section will tell you what you need to ask your employee.
Taking care to collect the correct information about your employees will save you time by reducing the amount of employee queries you get as well as helping to make sure your employees pay the correct tax and national insurance contributions.
Your employee must provide you with the following information before their first payday:
Wherever possible, check the information with a trusted official source such as a birth certificate or passport.
You must then show the date of birth, gender, full name and full address on starter notifications.
The following information relates to your employee's current employment circumstances. Your employee may find our guide 'Tax when starting, leaving or retiring from work' will explain why this information is needed. You'll find a link at the end of this section.
You can carry on paying an employee even if you haven't got their National Insurance number - but you must keep a record of their name, address, date of birth and gender. Follow the link below for what to do next.
Taking on a new employee - first steps
Tax when starting, leaving or retiring from work
Your employee needs to decide which of the following three statements fits their current employment situation. They must declare one of the three statements below:
A. Is this their first job since last 6 April and they have not been receiving taxable Jobseeker's Allowance, Employment and Support Allowance, taxable Incapacity Benefit, state pension or occupational pension.
B. This is their only job, but since last 6 April they have had another job, or have received taxable Jobseeker's Allowance, Employment and Support Allowance or taxable Incapacity Benefit. They do not receive state or occupational pension.
C. They have another job or receive a state or occupational pension. You also need to know if there is any student loan information you need to be aware of. This statement should be considered.
Your employee will also need to tell you if they left a course of UK Higher Education before last 6 April and received their first UK Student Loan instalment on or after 1 September 1998 and they have not fully repaid their Student Loan - box D on form P46 (you do not need to know about student loans being repaid by agreement with the UK Student Loans Company by monthly direct from a bank or building society account).
Once you have your employee information you can decide which tax code to use on the first pay day. This will depend on which of the statements your employee declared. Use the table below and select the relevant row depending on your employees declared statement A, B or C. Use the tax code indicated alongside in the 'Tax code to use' column and enter this tax code on your payroll records.
You should also commence student loan deductions if your employee has ticked box D on the P46 or advised you that they left a course of UK Higher Education before last 6 April and received their first UK Student Loan instalment on or after 1 September 1998 and they have not fully repaid their Student Loan.
Calculating student loan deductions
| Statement declared by your employee | Tax code to use |
|---|---|
| A | 810L cumulative |
| B | 810L week 1/month 1 |
| C | BR cumulative |
| None - your employee did not give you the information by their pay day | 0T week 1/month 1 |
If your employee hasn't completed the P46 or provided you with the information in time for their first pay day you must still notify HMRC by completing the information online to the best of your knowledge on their behalf and use code 0T on a week 1/month 1 basis.
Note that using code 0T could result in your employee paying more tax than they need to on their first pay day - it's therefore important that you make them aware of the impact on their pay if they don't supply you with the information in time for you to complete the P46.
Download on example of a completed form P46 (PDF 53K)
Whether or not you need to notify HMRC or just keep hold of the employee and tax code information depends on:
If you do need to notify HMRC, you must do so no later than the employee's first pay day.
Almost all employers will be required to file online. See the later section 'How to send form P46 to HMRC'.
The guidance below will help you decide whether or not you need to notify HMRC or just keep hold of the information.
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If the rate of pay increases at a later date to be equal to or more than the LEL, take appropriate action based on the instructions below
In this case:
To find out how to set up an employee's payroll record, and about the benefits of using software, follow the link below.
Payroll calculations and records: an introduction
In this case:
To find out how to set up an employee's payroll record and for an understanding of different tax codes, follow the links below.
Payroll calculations and records: an introduction
Understanding employee tax codes
In this case:
To find out how to set up an employee's payroll record, and for an understanding of different tax codes, follow the links below.
Payroll calculations and records: an introduction
Understanding employee tax codes
Almost all employers, regardless of the number of employees, must file these forms online.
If you're using HMRC's P11 Calculator, which is part of the Basic PAYE Tools package, you can file these forms online from there. If you use commercial payroll software this facility will probably be built in - however you'll need to check the features of your particular package.
You can also use HMRC's free PAYE Online service. Follow the first link below to find out how to register and start using this service.
Understanding and using PAYE Online for employers
File your PAYE in-year forms: P45, P46 etc
If you can't find the information you need about completing a form P45 ask a question through HMRC's email query service
Send an email query about completing form P46
If you still don't know which code to use and you're a new employer or have fewer than three years' payroll experience, call HMRC's New Employer Helpline.
Find contact details for HMRC's New Employer Helpline
Otherwise call HMRC's Employer Helpline - you'll find contact details using the link below.
Find contact details for HMRC's Employer Helpline
Improving the operation of PAYE: Real Time Information (RTI)
Common errors to avoid when filing forms P45 and P46
