What is a P45 and why is it very important ?
P45 is a crucial UK tax document !
P45 is provided by an employer when you leave a job, it details your National Insurance number, tax code, and the tax and PAYE you have accumulated up to your departure date.
P45 ensures the correct tax code !
When you start a new job, handing your P45 to our employer allows their payroll department to apply the correct tax code from day one.
How can I get my lost P45 ?
If you lost or did not receive your P45, then you can contact PayslipsP60.co.uk for a FREE advice on how to get your p45.
P45 prevents emergency tax !
Without a P45, your new employer must put you on a temporary emergency tax code. This can cause you to pay significantly more tax than necessary in your first pay checks
P45 tracks your tax-free allowance !
And it summarizes your total gross earnings and tax paid so far in the tax year, which keeps you from overpaying or underpaying into the UK tax bands.
P45 is required to start a new job !
When starting a job, you’ll need to provide your new employer with a variety of documents and information and one of the most important forms is your P45. Practically everyone knows the name, but far fewer understand what it actually entails.
Read on to find out what a P45 is, what information it contains, and why it’s so important.
What is a P45 ?
A P45 is an official certificate that your employer will give to you when you terminate your employment with them. It will have a number of details on the document including:
• Tax code
• Gross pay
• The amount of tax you have paid for the year
• Employer details
This document will then be passed onto your new employer after you have left the company. It is important to note that it is your company’s responsibility to provide you with this document, you shouldn’t have to request it, but if they don’t send it to you then it is within your right to ask that it be sent to your address or your new employer’s address, or you can contact PayslipsP60.co.uk for a replacement p45.
Why is a P45 so important ?
Without your P45, your employer won’t be able to make sure you’re assigned on the correct tax code. This means you could end up paying more tax, or be put on an emergency tax code. Although this money can be reclaimed by contacting HMRC, no one purposefully wants additional admin tasks especially when they can be so easily avoided,
The P45 also has a number of functions that aren’t directly related to starting a new job. You’ll need it to fill in a tax return, if required, and also to claim benefits and tax refunds if you are out of work. Further down the line, you may need to refer to your P45 to ensure you are not overcharged on tax when withdrawing money from a pension.
How long is a P45 valid for ?
A P45 is only valid throughout the tax year in which it was provided, but that doesn’t mean you should shred it straight after. You should keep it on record for at least 22 months after the end of the relevant tax year. However, you may wish to retain it for longer, as HMRC has the right to carry out tax investigations up to 20 years after the point.
What else do I need to do when changing jobs?
Other than getting your P45, you’ll need to perform a few simple admin tasks when starting a new job. On your first day, expect your new employer to ask you for the following:
• Your bank details
• A valid form of ID – most commonly a full driving licence or passport
• Proof of address – such as a full driving licence, utility bill or bank statement
• Your National Insurance number
How do I get a P45 ?
Although your employer should be proactive in providing you with a P45 when you leave the business, some people are unaware of the circumstances in which you should receive a P45 document. A P45 should not only be provided when you have chosen to move onto another company, but also if you have retired and therefore aren’t moving to another role, or if your employment has been terminated. P45 documents aren’t rewarded to you as an employee, they are an official document that you have a right to receive when leaving a company.
If you have lost your P45, then why not contact PayslipsP60.co.uk for a FREE advice on how to get your p45.
Starting a new job without a P45 !
The P45 document is important when you are starting a new role, as it ensures your employer knows which tax code should be applied to your first pay cheque. If your new employer hasn’t been sent this document prior to your pay date, then you may end up paying too much tax.
This can be an issue as you will typically have to wait until the end of the tax year to receive a reimbursement of the excess tax you have paid. Use PayslipsP60.co.uk to find out if you are paying the correct amount of tax.