What is a P45 form and what do I do with it?

Full answer

The P45 is a key document in the UK PAYE system, acting as a bridge between employments to ensure your tax position remains accurate as you move jobs. **What information it contains** A P45 shows your tax code at the point of leaving, your total taxable pay and tax paid so far in the current tax year (from 6 April up to your leaving date), your National Insurance number, and your employer's PAYE reference -- it comes in multiple parts, with different sections going to different recipients. **Why giving it to your new employer matters** Providing your P45 to a new employer lets them apply your correct tax code from day one and continue the cumulative PAYE calculation correctly, accounting for the Personal Allowance and tax already used earlier in the tax year -- without it, your new employer must use an emergency tax code (often non-cumulative), which can result in you paying more tax than necessary until it is corrected. **If you don't have a P45** If you have lost your P45, or are starting your first job, or have been unemployed for a while, your new employer will ask you to complete a "starter checklist" instead, gathering similar information to help apply a reasonably accurate tax code -- this is not as precise as a genuine P45 but reduces the risk of significant over- or under-taxation. **Using it for benefit claims or tax refunds** If you become unemployed and want to claim certain benefits, or you want to claim an in-year tax refund (via form P50 if you do not expect to work again that tax year), you may need to provide your P45 as evidence of your income and tax paid so far. **Employers must issue it promptly** Your employer is legally required to issue a P45 when you leave, without unreasonable delay -- if you have not received one within a reasonable time after your last day, follow up with your former employer's payroll or HR department. **Worked example** Someone leaves a job in August having earned £16,000 and paid £680 in tax so far that tax year. Their P45 shows these figures along with their tax code. When they start a new job in September, providing the P45 lets the new employer continue the cumulative calculation correctly, ensuring they get the correct remaining Personal Allowance for the rest of the year rather than starting from scratch on an emergency code. **Digital P45s** Many employers now issue P45s digitally rather than on paper, and HMRC's Real Time Information system also shares much of this data directly between employers, meaning the process is increasingly automated -- but it remains good practice to keep a copy for your own records regardless. **Practical tip** Keep your P45 safe and provide it to your new employer as soon as possible after starting -- if too much time passes without submitting it, some employers may have already processed you on an emergency code, requiring a correction later rather than getting it right from the start.

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