Is it Mandatory to have P45 for UK Employee? 06 Feb 2024

Having a P45 is not mandatory for all UK employees, but it is a standard document that is typically issued by employers to employees when they leave their job. The P45 provides important information about an employee's earnings and tax deductions during their employment, and it serves as a record of their income for the tax year up to the date they left the job.

Here are some key points to consider regarding the P45 for UK employees:

Issued upon leaving a job: Employers are legally required to provide a P45 to employees who leave their job, either because they resign, are made redundant, or their employment ends for any other reason. The P45 should be given to the employee on or before their final payday. Order P45 Online UK

Information included: The P45 contains details of the employee's total pay, tax code, and the amount of tax and National Insurance contributions deducted from their pay up to the date of leaving the job.

Purpose of the P45: The primary purpose of the P45 is to provide the necessary information to the employee's new employer when they start a new job. The new employer uses the information from the P45 to set up the employee's payroll and ensure that the correct tax code and tax deductions are applied.

New employees without a P45: If an employee does not have a P45 from their previous employer, they will need to complete a Starter Checklist (previously known as a P46 form) for their new employer. The Starter Checklist collects essential tax information and helps the new employer determine the appropriate tax code to use.

Record-keeping: While it is not mandatory for employees to have a P45, it is essential to keep it safe as it serves as a record of your income and tax payments for the tax year. The information on the P45 may be required for various purposes, such as completing a tax return or applying for benefits.

In summary, while it is not mandatory for employees to have a P45, it is a standard document issued by employers when an employee leaves a job. The P45 is an important record of income and tax deductions, and employees should keep it safe for future reference. If an employee does not have a P45, they can complete a Starter Checklist for their new employer to ensure accurate tax deductions on their new job.