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What is a P45?

You may have heard about the P45 form, but not a lot of people understand exactly what it is, or why it matters. So, what is a P45? Let’s find out...

There’s always some admin and form-filling to do whenever you start a new job. Your employer will ask to see certain information and documents to check you are who you say you are, to make sure everything’s above board.

So, what do they typically want to know?

  • Your name. That’s a given.
  • Proof of address. Your phone number. National Insurance number. Easy.
  • Bank details. You bet. The amount of tax you’ve paid during the current tax year. Wait. What?

Where do you find that last one? Your P45, that’s where!

What is a P45 form?

The P45 is a form that shows how much tax you’ve paid on your salary so far during the tax year, which runs from April 6 to April 5 the following year.

P45 is actually a reference code. The actual name of the form is “Details of employee leaving work”.

When you leave a job, your employer will issue you with your P45. The form comes in four parts: Part 1, Part 1A, Part 2 and Part 3.

  • Your employer sends details for Part 1 to HM Revenue and Customs (HMRC). You are given the other parts.
  • If you’re moving to another job, you give Part 2 and 3 to your new employer. If you’re not working, you can take those parts to Jobcentre Plus.
  • You keep Part 1A for your own records.

How do you get a P45?

Your employer should give you one when you stop working for them. It doesn’t matter whether you quit, or if you were terminated, your contract ended, or you retired; by law, your employer must give you a P45.

If your employer doesn’t issue you with one automatically, you should ask for one. If they refuse, you can contact HMRC, who will contact your employer and remind them of their legal obligations.

What is a P45 form used for?

If you don’t have your P45, your new employer can’t be sure you’ve been assigned the correct tax code. This could lead to you paying more tax than you’re liable for, or being put on an emergency tax code.

Of course, if you do end up overpaying tax, you can contact HMRC to claim it back — but having your P45 will save you from the hassle.

Your P45 can also be used to complete a tax return, if necessary, and to claim tax refunds and benefits if you’re not working. And when you reach retirement age, you can check your P45 to make sure you’re not being overtaxed when withdrawing money from your pension.

How long is your P45 valid for?

Your P45 is only valid for the tax year in which it was issued.

However, you should keep it on record for at least 22 months from the end of that tax year — and maybe even longer, as HMRC reserves the right to conduct tax investigations spanning as far back as 20 years.

If you’ve been out of employment for more than a year, your old P45 will be invalid for a new employer. Instead, you’ll be asked to complete the Starter Checklist when you start a new job.

What’s the difference between a P45 and a P60?

It’s worth knowing the difference between the P45 and P60 forms, in case you need to claim a tax repayment or complete a tax return.

In simple terms:

  • Your P45 provides a summary of the tax and National Insurance paid by your employer, within the tax year, up to the date that you left the job.
  • Your P60 is a summary of your pay for the entire tax year. It shows the total amount you were paid, and the amount of tax and National Insurance deducted.