Pay-as-You-Earn (PAYE) workers need the P45 form when they start their first job or leave an old role for another. The form basically passes their tax and payroll information to their new employer. Read on for more information about how to get P45 UK, what the form is for, and other relevant details an employee must know.
What Is the P45 PAYE Form
The P45 form is always a staple document when switching to another job. However, not many employees know what the form is about. Below, we outline everything they must know about this PAYE form.
Who Gets the P45 Form
Every PAYE employee is entitled to obtain a P45 form when they are:
- Starting their first job
- Switching to a new job
Retirees and terminated employees must also receive their P45, as the form is not a reward for employment but an official document mandated by HMRC for tax purposes.
What Is in the P45 Form
The form has four parts:
- Part 1 for HMRC
- Part 1 A for the employee
- Parts 2 and 3 for the next employer
The P45 form contains the following details:
- Employee’s tax code
- Gross salary
- Taxes paid that year
- Employer information
It does not include pension and National Insurance contributions. Employees may want to keep the payslip instead so they can still trace these details in retirement.
When Is the P45 Form Provided
Employers must provide their employees with the P45 form once they quit their job, but not necessarily on the effective date of their leave. However, employers are expected to provide the document soon after they have sorted their employers’ taxes and final pay.
How Long Is the P45 Form Valid
The form is only valid throughout the tax year it was provided, but it is highly recommended for employees and employers, old and new, to keep the P45 form for six years in case HMRC does retrospective inspections.
What Is the P45 Form For
The P45 form primarily exists to keep employees’ taxes straight when they are starting on a new career. However, its role is more than that. Here are all its uses:
Correct Tax Code
When starting a new or first job, the P45 form shows which tax code the employee is assigned to. This prevents them from overpaying taxes or being given an emergency tax code, which could lead them to a higher tax bracket. Being in the wrong tax code can be very hassling, as the employee must go through several admin processes and wait until the tax year ends to claim HMRC’s refund.
Filing Tax Returns
Whilst PAYE employees do not need to file a tax return, they may need to simultaneously file self-assessments such as when they are also earning self-employment income or claiming a tax rebate. They can refer to their P45 information to claim refunds and benefits, such as social welfare, if they are no longer employed, or check whether they are taxed more than they owe when withdrawing their pension.
Streamlined Payroll
For employers, having their employees’ P45 form ensures they enter the right tax information into their payroll software, ensuring the latter’s pay is deducted by the right tax rate.
HMRC Investigations
In case HMRC does retrospective checks on the employee or employer’s tax situation, being able to provide the P45 forms will greatly help in the process. Keeping the form for at least 22 months or longer is highly recommended, as HMRC can go back up to 20 years in investigation.
How to Get P45 When Changing Jobs
Employees must expect their employers to provide them with the P45 form as soon as possible. Most of the time, the old employer will pass the document to the new company, and the employee need not worry about how to get P45 form.
However, if it is not provided, they have the right to repeatedly request the form from Human Resources until it is given. They can request it to be sent either to their new employers’ address or theirs. If this does not work, they may escalate the concern to HMRC to help chase after the employer.
If the form should be delayed, they can use the same process on how to get P45 online when they are embarking on a job for the first time or have lost the form, for some reason. See below for more information.
How to Get P45 When Starting a First Job
Evidently, first-time PAYE employees do not have the P45 form. Their employers will ask them to fill out the Starter Checklist, formerly P46. This form will ask for several personal details including the following:
- If the job is their first for that tax year
- If it is the only job they currently have but not their first job in that tax year
- If they have a pension income or other taxable benefits at the same time
- If they are paying off a student loan
New employees must be able to provide all details correctly so that they get assigned to the right tax code.
How to Get P45 If Lost
If employees lose their P45 form, they can request another copy from their employer and they should be able to provide one. However, employees should take note that original P45 form copies cannot be replaced for that tax year if lost.
In this case, they must use the same Starter Checklist as discussed above. This also applies to those who have had no PAYE job for more than a year or started a second job without quitting on the first.
Frequently Asked Questions
The P45 form is used when the employees quit and switch jobs, whilst the P60 form summarises the employees’ tax details when the tax year ends.
The form is valid throughout the tax year in which it was provided. It ceases validity in the next tax year.
If an individual does not have a passport, they can present a letter from the Department for Work and Pensions (DWP) or a tax document such as a P45 form as alternative documents to prove their right to work in the UK.
How Legend Financial Can Help
Employers can use a reliable payroll system to streamline their business tax and accounting affairs, whilst employees can comply with their tax duties better with the help of tax experts. Legend Financial has helped a lot of clients for more than ten years, whether they are business owners or employees, with their tax, accounting, and business development needs. Our tax accountants will aid not only with how to get P45 but more. Reach us today!
