There’s lots of things at play when you leave your job and it’s understandable that your P45 is probably not top of your list.
That scrap of paper filled with reams of numbers and codes is often destined for the ‘drawer of paperwork’ if not the recycling but is hugely important. Don’t throw it away!
What is a P45?
Your P45 simply details your earnings throughout a stint of employment. Crucially, it also details the tax and National Insurance contributions you have made to HMRC.
It’s these details you need to present to your new employer, or to the relevant benefit authority (Jobseekers, Universal Credit etc.) to ensure that you don’t pay more tax than you need to, and receive a rebate if you already have.
It’s hardly likely that you’ll make a decision to leave a role, or start somewhere else, in accordance with the tax year so keeping a record of your earnings is important to make a seamless transition.
How to get one
Don’t make the easy assumption that a P45 will land in your lap once you give your notice. Yes, it should be an automatic process but it’ll often fall under an administration function. Depending on the size of the organisation and the structure you may have to approach the HR department, payroll team, Team Leader or Manager to put in a request for one. If so, be nice about it.
It’s not something that is automatically generated, so depending on the length of work you have done it’s certainly something to chase.
It can take a matter of weeks to generate and is normally posted out to you, but can be emailed depending on your circumstances. It’s worth getting yourself a paper copy but if you’re moving house or moving between roles quickly then seek your employer’s advice on what’s best.
It’ll arrive in three parts; one part for you and two parts for your new employer.
So, what’s a P60?
A P60 is not the same as a P45 and is something you should receive automatically from your employer or payroll provider.
You should be sent, or have access to, a P60 at the end/start of every tax year (April) which will tally up your earnings for the previous tax year. Again, it’ll include your tax contributions you have made in this period.
It’s another important document for your records, always worth checking if you’re owed a rebate and can help solve any disputes you may have with HMRC so, again, definitely worth keeping hold of.
Or a P46?
A P46 is different again, but can solve an issue if you either don’t have a P45, have lost it, or are waiting for it.
Often used by recruitment agencies who are looking to bring you on for temporary employment, a P46 is a form to be completed prior to you starting work. It’s something provided to you prior to starting and not something you need to give yourself.
It’ll ask you to complete your personal details and confirm when you were last in employment.
After being logged into the payroll, it will get you back onto a relevant tax code which should ensure you don’t pay any more or less tax than you need to.
Be careful moving between temporary roles
You may be in a situation where it is necessary to switch quickly between short-term roles. Perhaps across a summer you work for a few different agencies in succession. It’s important to chase up P45s and keep a record of hours worked and money earned in these situations. Although your tax contributions may be reduced due to working shorter hours you may qualify for a rebate.
Switching from monthly to weekly pay, or vice versa, is another common tax issue for employers. You may be in a position to be paid before your P45 comes through. This is where the P46 comes into play so be mindful and ensure your new employer has one of the two documents for you.
It’s understandable to focus on the sometimes exciting aspects of leaving a role. Or even the worrying bits about resigning which we’ve detailed in our blog on the subject.
Always try to remember, though, that there are factors at play to make a job move as seamless as possible.
To ensure you don’t have to pay emergency tax, and to keep the dream of a rebate alive, keep hold of any documents that are issued by HMRC or your employer.
A P45 is vitally important in ensuring you pay the correct amount of tax when you start a new role.
As tempting as it may be to see a P45, P60 or even a payslip as unnecessary paperwork it’s always worth filing them away somewhere safe for at least the following tax year (April).
About The Author
Daniel Oldfield is the Branch Manager of The Recruitment Lab, a Brighton recruitment agency. He has worked in Recruitment for six years. He has a degree in Journalism and considers himself a film and music buff. Daniel also runs The Brighton Film Club review site in his own time. If you would like to know more about anything written in this blog or would like to express your thoughts just contact Dan through The Recruitment Lab website.