When an employee leaves your organisation, there are several things that you must sort out. Chief among them, you need to confirm their final pay, update your payroll records, tell HMRC they have left and give them their P45 form.
A P45 is an important part of the offboarding process. It records the leaving date of the employee and information regarding their pay and taxes so HMRC and their next employer have all of the information they need. As an employer, you must give an employee a P45 when they leave. You also need to report their leaving information to HMRC through your payroll.
In this guide, we’ll explain what a P45 is, when you need to issue one, what information it includes and how it fits into your wider employee offboarding process.
Key facts about P45 forms
- A P45 is issued when an employee leaves your business.
- You must report the employee’s leaving date to HMRC through your payroll.
- The P45 shows their leaving date, tax code and pay and tax information.
- You should normally issue it on the employee’s last day or as soon as possible afterwards.
- If a new employee does not have a P45, you can use an HMRC starter checklist instead.
- A P45 is different from a P60, which is issued after the end of the tax year to employees who are still working for you.
For a closer look at everything that you need to do when somebody leaves your organisation, read Factorial’s employee offboarding guide.
What is a P45?
A P45 is an HMRC tax document that you give to an employee when they leave your business. Its official title is “Details of employee leaving work”.
The form gives a record of important PAYE information, including:
- the employee’s leaving date
- their tax code
- their pay for the tax year
- the Income Tax deducted
- their National Insurance number
The amount of pay and tax cover the period from 6 April to the date the employee leaves. This information helps HMRC keep the employee’s tax records up to date. It can also help their next employer work out the correct tax to deduct from their pay.
A P45 is part of your wider PAYE responsibilities. For more information on running PAYE, see Factorial’s PAYE guide for employers.
Why is a P45 important?
A P45 is important for both you, as the employer, and the employee who is leaving.
For employers, it helps you:
- complete the employee’s payroll record correctly
- report their departure to HMRC
- keep accurate PAYE records
- complete an important part of the offboarding process
For employees, their P45 gives their next employer information they can use to work out the correct tax code and PAYE deductions.
When do you issue a P45?
You should issue a P45 when an employee stops working for you.
This applies whether they leave because they:
- resign
- are dismissed
- are made redundant
- reach the end of their employment
- retire
According to HMRC, employers give the employee their P45 on their last day of employment or as soon as possible afterwards.
In practice, you will normally process the employee’s final pay first. You then report their final pay and leaving information to HMRC before producing the P45. There are special payroll rules in some situations, such as when you continue paying an employee a company pension. You can check the full HMRC guide on what to do when an employee leaves for these cases.
Do you issue a P45 at the end of the tax year?
No, a P45 is linked to an employee leaving their job, not to the end of the tax year. If an employee is still working for you on 5 April, they will normally receive a P60 instead.
You can read more about the difference in Factorial’s guide to P60 forms for employers.
What information is on a P45 form?
A P45 contains information about the employee and their PAYE record when they leave.
The main details include:
Employee details, such as their name and National Insurance number
- Leaving date
- Employer PAYE reference
- Tax code in use when they left
- Total pay to date
- Total Income Tax to date
- Pay and tax from this employment
- Student Loan information, where relevant
- Payroll number, if used
The form therefore gives the employee and their next employer a useful record of their tax position at the point they left.
Regarding whether the form shows the employee’s salary, a P45 shows the employee’s pay for tax purposes up to the point they leave, but it does not show their annual contractual salary.
For example, if someone earning £36,000 per year leaves halfway through a tax year, their P45 will not simply say that their salary was £36,000. It will show the relevant pay actually recorded for PAYE during the tax year up to their leaving date.
What are the different parts of a P45?
A paper P45 has a few different parts. Part 1A is for the employee to keep. Parts 2 and 3 can be given to their next employer. If the employee starts claiming certain taxable benefits instead of starting another job, they may give the relevant parts to Jobcentre Plus.
As an employer using Real Time Information, you do not normally send a paper Part 1 to HMRC. Instead, you report the employee’s leaving information through your Full Payment Submission.
Your payroll software will normally handle the process of preparing and distributing P45 forms for you.
How to issue a P45 when an employee leaves
The P45 should form part of your offboarding process and your payroll.
1. Confirm the employee’s leaving date
Make sure you have the correct final working day.
Add this date to the employee’s payroll record when processing their final pay. HMRC uses the leaving date to update the employee’s PAYE record.
2. Calculate the employee’s final pay
Process everything that needs to be included in the employee’s final payroll.
Depending on the situation, this might include:
- normal salary or wages
- overtime
- bonuses
- commission
- outstanding holiday pay
- deductions
- other payments due on leaving
Make sure the figures are correct before completing the P45. Read our guide on calculating payslips if you are unsure of what you need to include.
3. Report the employee leaving to HMRC
Include the employee’s leaving date and final payroll information in your Full Payment Submission.
HMRC says final pay and leaver information should be sent on or before the day you pay the employee.
4. Generate the P45
Once the final payroll information has been processed, use your payroll software to generate the employee’s P45.
If your payroll software cannot create a P45, you can use HMRC’s Basic PAYE Tools. Employers who are exempt from online payroll reporting can order forms from HMRC.
5. Give the P45 to the employee
Give the employee their P45 when they leave or as soon as possible afterwards.
Make sure the employee knows how they will receive it, particularly if they lose access to your HR or payroll system after their final day.
That last point is easy to overlook. If employees normally access payroll documents through an internal employee portal, make sure important leaving documents remain accessible or are sent to them before their account is closed.
What happens if you pay an employee after issuing their P45?
Sometimes you may need to make another payment after the employee has already left and received their P45.
For example, you might discover that they are still owed:
- holiday pay
- a bonus
- commission
- another taxable payment
If this happens, you should not issue another P45. Instead, HMRC says you should use tax code 0T on a week 1 or month 1 basis for the post-leaving payment, report it in your next FPS using the original leaving date, and mark it as a payment after leaving. You should also give the former employee written details of the payment and deductions.
This is another reason to check final pay carefully before you close the employee’s payroll record.
What if the P45 is wrong?
Remember to always check P45 information before you send it. If the employee later tells you that their pay or tax figures are wrong, HMRC says they should ask their previous employer to correct the details and provide an amended P45, meaning it is your responsibility.
You should also correct the payroll information where required. Changing the document alone is not enough if incorrect information has also been reported to HMRC.
What if an employee loses their P45?
HMRC says an employee cannot get a replacement P45 if they have lost the original. Instead, they can complete a starter checklist for their new employer.
They can also view and download pay and tax information from the last five tax years through their Personal Tax Account or the HMRC app.
So, if a former employee asks you for a replacement because they lost their P45, you can explain that they should use HMRC’s alternative process rather than issuing another P45.
What if a new employee does not have a P45?
You may also deal with P45s from the other side when somebody joins your business. Ideally, a new employee gives you their P45 from their previous employer. You can use the information on it to help set up their payroll record and tax code.
However, an employee does not need a P45 in order to start working for you. If they do not have one, ask them to complete the new starter checklist available on HMRC. This provides the information you need to set them up on payroll.
If the employee gives you their P45 after you have already paid them, HMRC also has rules on how to update their payroll record.
Make employee offboarding easier with Factorial
Factorial is an AI business management platform that brings HR, finance and IT together in one place, that can make your work much easier thanks to offboarding software features. When somebody leaves your company, you can keep employee information and documents organised, create structured offboarding workflows and make it easier for different teams to see which tasks still need to be completed.
Factorial can also connect HR and IT processes. For example, IT tools can help businesses track company devices and revoke software access when an employee leaves.
This means HR can manage the employee exit, finance and payroll teams can prepare the information needed for final pay, and IT can deal with access and equipment without relying on separate spreadsheets and long email chains.
The P45 itself may be only one document, but it sits within a much bigger process. Bringing that process together can help you offboard employees more consistently and make sure important tasks do not get forgotten.
FAQs ABout P45 Forms
A P45 is a tax document you receive when you leave a job. It shows information such as your leaving date, tax code and pay and Income Tax for the tax year up to the point you left.
Your employer should give you a P45 when you leave. If you have left and have not received one, ask your previous employer for it.
No. You can start a new job without a P45. If you do not have one, your new employer can ask you to complete HMRC's starter checklist instead.
Not exactly. A P45 shows your pay for tax purposes up to the date you leave, rather than simply showing your annual salary.
Yes. If an employee leaves, you must give them a P45 and report their leaving information to HMRC through payroll.
