We decode the P45 to answer exactly what is a P45, when you should expect to receive one and explain what information it contains.
You receive a P45 from your employer when you stop working for them.
The P45 is produced by your employer showing how much you were paid (before tax) and the amount of tax they deducted from your salary whilst in their employment.
The figures contained on your P45 relate to just the current tax year not the whole time you were in their employment. A tax year runs from 6th April to 5 April each year. So, for example, say you worked for an employer from 1 January 2017 to 30 September 2017, then the figures on your P45 will relate to your earnings and tax for tax year 2017/2018 i.e: 6 April 2017 to 30 September 2017. Your employer should have issued you a P60 which would have detailed your earnings for 1 January 2017 to 5 April 2017.
Your P45 also contains other important information
The P45 also shows:
- tax code and PAYE reference
- your National insurance number
- your full name (inc middle names)
- leaving date
What is a P45 For?
A P45 is made up of four parts –
- Part 1
- Part 1A
- Part 2
- Part 3
Each part serves a different purpose but a P45 tells you how much you have been paid and tax deducted from this by a particular employer.
Part 1 of your P45 is now electronically sent to HMRC by your employer who should then give you the three remaining parts.
You should keep Part 1A for your own records. If you complete a tax return, you will need this so find out how much you have earned and, importantly, how much tax you have a already paid so you don’t overpay. You may also be asked to prove your income if you are applying for a loan or a mortage, so your P45 could act as evidence of earnings.
Part 2 and 3
Once you begin a new job you will need to pass Parts 2 and 3 to your new employer. Your P45 includes all the important information they need to know about you so you can get paid correctly. For example, so they know which tax code to use and how much tax you have paid already so you are allocated your personal allowance correctly.
Your P45 is a legal document
If you do not receive your P45 when you stop working for your employer, ask for it – you’re entitled to it by law.