P45

A P45 is the form an employee receives when they leave a job. It records their pay and the tax deducted so far in the current tax year, along with their tax code at the date of leaving — the details the next employer needs to keep deductions right from day one.

Who does what with it

The leaving employer generates the P45 through payroll software and reports the leaving to HMRC through Real Time Information. The employee keeps Part 1A for their own records and hands the remaining parts to their new employer, who uses them to set the correct tax code. The form must be provided without unreasonable delay when someone leaves — in practice, with or soon after their final pay.

When there isn't one

New starters in hospitality and retail often arrive without a P45 — it is their first job, they have lost it, or the old employer is slow. That is fine: they complete HMRC's starter checklist instead, which puts them on an appropriate code until HMRC confirms the right one. What to avoid is paying someone off the books while paperwork catches up — every payment should go through PAYE from the start.

Income Tax (Pay As You Earn) Regulations 2003 — issued through payroll and reported to HMRC via Real Time Information; guidance on GOV.UK.

Related terms

• P60
• PAYE
• Payslip