When you take on a new employee, you must get specific information from them and report it to HM Revenue & Customs (HMRC) the first time you pay your new employee.
You must use the right tax code for new employees and report their details to HMRC via a Full Payment Submission (FPS) the first time you pay them. Usually, most of this information is on your new employees' P45 from their previous employer but there may be occasions when the new employee won't be able to give you a P45.
This guide will show you what information you need from your new employee to set them up on your payroll, how to check the details you are given and which information you should use.
On this page:
Once you start reporting your PAYE information in real time you won't be able to submit forms P45 and P46 via HMRC's Online Service - this is because you must tell HMRC about people who've started working for you, or left, using your real time submissions (Full Payment Submissions, or FPS) through your payroll software.
If you've been notified that you must start reporting PAYE in real time from April 2013, if you try to send P45s or P46s via HMRC's Online Service they will be rejected so you need to take the following action:
For employees who left your employment in 2012-13:
For employees who started in your employment in 2012-13:
Read the rest of this guidance to find out how to let HMRC know about employees who've started or left since you started reporting PAYE information in real time.
The information from your new employee's P45 that you must use to set them up on your payroll and report to HMRC correctly is their:
You will also need to report the following for all new employees on their first FPS:
You must work out and apply the right tax code for your new employee. The tax code you need to use depends on when they left their previous employer and their starting date with you as shown in the tables below.
If the leaving date on the P45 is:
Employee's date of leaving on P45 |
Employee's start date with you |
Tax code on P45 |
Starter Declaration declared by employee |
Starter Declaration to be reported on FPS |
Tax code to use |
|---|---|---|---|---|---|
6 April 2013 to 5 April 2014 |
On or after 6 April 2013 |
Code other than BR, 0T or D prefix |
Not needed |
B |
Use the tax code on the P45 |
6 April 2012 to 5 April 2013 |
6 April 2013 to 24 May 2013 |
Code other than BR, 0T or D prefix |
Not needed |
B |
Use the tax code on the P45 and add budget increase of 134 to any code ending in L - for example 810L becomes 944L (but do not carry forward any week1/month 1 markings from the P45) |
6 April 2012 to 5 April 2013 |
On or after 25 May 2013 |
Code other than BR, 0T or D prefix |
Not needed |
B |
Emergency code 944L on a week 1/month 1 basis |
Any of above dates |
Any of above dates |
Code is BR, 0T or D prefix |
Not needed |
C |
Use the tax code on the P45 |
Employee's date of leaving on P45 |
Employee's start date with you |
Tax code on P45 |
Starter Declaration declared by employee |
Starter Declaration to be reported on FPS |
Tax code to use |
|---|---|---|---|---|---|
Before 6 April 2012 |
On or after 6 April 2013 |
Tax code on P45 not to be used |
A |
A |
944L |
Before 6 April 2012 |
On or after 6 April 2013 |
Tax code on P45 not to be used |
B |
B |
944L on a week 1/month 1 basis |
Before 6 April 2012 |
On or after 6 April 2013 |
Tax code on P45 not to be used |
C |
C |
BR |
Before 6 April 2012 |
On or after 6 April 2013 |
Tax code on P45 not to be used |
None |
C |
0T on a week 1/month 1 basis |
You must check the figures supplied on your new employee's P45.
Whichever method you use, you must:
If you use commercial software, it may carry out the checks for you. You can ask your software supplier if you want to make sure. If you use HMRC's Basic PAYE Tools, it will carry out the check for you.
If you find that the figures on your new employee's P45 are incorrect, you should use the correct figures when you set up the new employee's payroll record. If there is a week 1 or month 1 indicator on the P45, you should enter 'nil' as the previous pay and tax details on the employee's payroll record.
Disregard the pay and tax figures and report the started declaration as shown in the above table.
You will need to check that your understanding of their employment situation is correct. You need this information when you tell HMRC about your new employee.
You should ask them to confirm whether:
A. This is 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.
If you don't have a National Insurance number for your new employee, ask them for an old payslip or form P60 - their National Insurance number should be on these. If your new employee can't give you an old payslip or P60, you can send a National Insurance number verification (NVR) request via a payroll submission.
This service will probably be part of your payroll software package. Check with your software supplier if you're not sure. HMRC's Basic PAYE Tools allows you to send National Insurance number verification requests.
Please note you cannot send an NVR until you have started to send PAYE information in real time - wait a few days after sending your first FPS before sending an NVR.
Making sure you use the correct National Insurance number
You must also ask your new employee to confirm if they left a course of UK Higher Education before last 6 April and received their first student loan instalment on or after 1 September 1998.
You also need to find out if they have not fully repaid their student loan.
If your new employee says 'yes' to these student loan questions, you must start making student loan deductions from their pay, unless they are repaying a UK student loan by agreement with the UK Student Loans Company to make monthly payments through their bank or building society account.
You can store the information you must gather about your new employee in the format you prefer. HMRC has a Starter Checklist you can use but this form, or any other records you keep, must not be sent to HMRC. You must keep your records for the current and previous three tax years.
Download the optional form Starter Checklist (PDF 767K)
There may be occasions when your new employee won't be able to give you a P45. You must still use the right tax code for new employees and report their details to HM Revenue & Customs (HMRC) via a Full Payment Submission (FPS) the first time you pay them.
HMRC's guide 'Employee doesn't have a form P45' will tell you what you need from your employee before their first payday.
If your new employee comes to work for you from abroad and falls within the definition of a 'seconded employee', you will need to follow a different process when you first pay them. You can find out more about what you need to do if your new employee is a 'seconded employee' by following the link below.
Employees coming to the UK from abroad
Employee doesn't have a form P45
Understanding employee tax codes
You must send details of new employees to HMRC when you make your first payment to them. You do this by including them on the first FPS you make which includes the first payment to your new employee.
You can set up new employees on your payroll before you make your first payment to them once you have gathered all the information above but you only have to report their details when you first pay them.
It's important to remember that:
You can find out more details about the payroll data you need to report by following the link below.
If your employee gives you a starter declaration after your first FPS for them
Sometimes a new employee may give you a P45 after you have made an FPS that includes them. For example, they may have got their P45 from a previous employer late, or they may not have given it to you in time.
What you need to do depends on whether you have received a tax code for the new employee from HMRC.
You should continue to use the tax code, and any previous pay and tax information, supplied by HMRC. If the student loan indicator is shown on the P45 start deducting student loan repayments, unless you've been told by HMRC to stop, from when the employee started with you.
You should check the details on the P45. You can find out how to do this in the section 'Using the correct tax code and starter declaration for new employees' earlier in this guide.
If the figures on the P45 (if dated after 6 April 2013) are incorrect, you should use the corrected figures.
You record the P45 information differently depending on whether you are using commercial payroll software or HMRC's Basic PAYE Tools.
If you are using commercial payroll software:
If you are using HMRC's Basic PAYE Tools:
Note: Whether you use commercial payroll software or Basic PAYE Tools, it's important that you don't put another start date on the FPS - including where there was no start date reported on their first FPS. If you do, this could cause duplicate 'employments' on HMRC's records.
How to report your payroll information
