What is a P45?
A P45 document records details about your income and the tax you’ve paid while working for a particular employer. The form ensures that your tax records are accurate and up-to-date, both for you and for HMRC.
You will receive a P45 when you leave a job. Whether you resign, retire, or your employer makes you redundant, they must give you this document. The P45 comes in four parts, each with its own purpose.
Breaking Down the P45 into Four Parts
A P45 consists of four parts: Part 1A, Part 2, Part 3, and Part 4. Different entities receive each part, with each serving a specific purpose.
- Part 1: This part is sent directly to HMRC by your employer. It includes details about your total earnings, your tax code, and the tax and National Insurance contributions deducted from your salary. This information helps HMRC keep your tax records accurate and ensures you pay the correct amount of tax.
- Part 1A: This part is for your records. It contains the same information as Part 1. Keeping this part safe is important because it serves as proof of your employment. You might need it if you apply for benefits or a tax refund, or even if you need to provide an employment history to future employers.
- Part 2: This part is given to your new employer. It allows them to correctly calculate the tax and National Insurance contributions for your future pay. Without this information, your new employer might not deduct the right amount of tax, which could lead to issues later on.
- Part 3: This final part is kept by your previous employer for their records. It includes details of your earnings and the deductions made during your time with that employer.
Why is a P45 Important?
A P45 ensures that your tax contributions are correct and up-to-date. Additionally, it makes sure that when you start a new job, your new employer has the correct information to calculate your tax and National Insurance deductions.
Without a P45, there could be delays or mistakes in your tax calculations, which might result in paying too much or too little tax. This document also helps with a smooth transition between jobs, as it provides your new employer with all the information they need.
What Should You Do If You Don’t Receive a P45?
If your employer doesn’t give you a P45 when you leave, it’s important to ask for it. If they still don’t provide it, you can contact HMRC directly. They will guide you on how to ensure your tax records are accurate without the P45.
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