There are many things you need to give your new boss when you start a new job. Your P45 is one of the most important forms. Almost everyone knows the name, but not nearly as many know what it means. Continue reading to learn what is a P45, what information it includes, and why having one is so very necessary.
What is a P45?
The official document that the employer will give you when you leave their company is called a P45. The paper will have a lot of information on it, such as:
- Tax code
- Gross pay
- The amount of tax you have paid for the year
- Employer details
You will then give this paper to your new boss after you leave the company. It’s important to remember that this document should be sent to you by your workplace, not the other way around. If they don’t, you can ask for it to be sent to your new employer’s address.
Your boss has to give you a P45 every time you quit your job. There is information about your income and the taxes you paid during the tax year on the form. It is always the employer’s job to make sure that the worker gets their P45.
What Does a P45 Look Like?
The format for the P45 isn’t set in stone. Even though they may be slightly different, they are all basically forms that ask for important information like your job, full name, national insurance number, tax code, and pay information.
There are four parts to the form: 1, 1A, 2, and 3. Your new company gets parts 2 and 3, and Part 1 is sent to HMRC. You keep Part 1A for your own papers.
Why is a P45 so Important?
Without your P45, your employer won’t be able to check that you’re on the right tax code. You might have to pay more tax or be put on an emergency tax code because of this. Contacting HMRC is the only way to get this money back, but no one wants to do more paperwork when it’s so easy to dodge it.
There are other things that the P45 can do besides helping you start a new job. If you have to, you’ll need it to file your taxes. If you are unemployed, you’ll also need it to get assistance and tax returns. In the future, you may need to look at your P45 to make sure you aren’t being taxed too much when you take money out of your pension.
How do I Get a P45?
Although it’s the employer’s responsibility to give you a P45 when you leave, some people don’t know when you should get one. A P45 should be given not only when you choose to move on to another company, but also when you leave and won’t be going to a new role, or when your job has ended.
The P45 is an official record that you should get when you leave a job, not something that you get as an employee.
If you lose your P45, all you have to do is ask your employer for a new one, and they should give it to you.
What Do You Do If Your Employer Won’t Issue Your P45?
First of all, you should probably ask your old employer. It’s possible that they forgot to send your P45, or there was a delay. It might be a good idea to talk to an employment expert about the situation if they don’t get it fixed quickly. Your new director can get you started right away with a new starter guide.
This will only ask if you have any other jobs, school loans, or anything else that might change your tax situation or pay. Before you even get paid for the first time, the new employer will be able to figure out your new tax code.
Get in touch with HMRC if nothing else seems to work. This should fix the problem because employers won’t want to risk getting fined by HMRC.
How Long is a P45 Valid for?
Even though a P45 is only good for the tax year it was given to you, that doesn’t mean you should throw it away right away. It’s important to keep the record for at least 22 months after the tax year ends. This is because HMRC can do tax reviews up to 20 years after the fact, so you might want to keep it longer.
What if Your P45 Contains Incorrect Information?
When you get your P45 from the employer, it’s always a good idea to look it over. Before you do anything else, you should tell the employer’s human resources staff about any mistakes you find and ask them to be fixed.
You should get in touch with HMRC if you think the tax code they gave you is wrong. As we already said, until your P45 is full, you’ll likely need to go through a starting schedule at your next job.
What Happens If You Lose Your P45?
You can’t get a new P45 if you lose it. Like we said above, your boss will likely give you a starting pack and ask you for all the information they need about your finances. They need to make sure that HMRC has all the right information about you so that you are on the right tax code for your new job.
What Happens When You Retire?
When you leave your last job and retire, your employer will issue you with a P45. As soon as you get it, you should give the information to the company that covers your salary. This will make sure you pay the right amount of taxes when you start taking money out of your salary.
Quick Wrap-Up
In summary, the P45 is a crucial document during job transitions in the UK. This post explained its significance, highlighting what it is, its components, and its role in ensuring accurate tax codes for new employment. Emphasizing the importance of timely receipt and submission, it also addressed scenarios where employers fail to issue a P45. The post touched on the validity period and the need to retain the document for potential future tax reviews. Understanding the P45 is essential for individuals navigating job changes, ensuring financial accuracy and compliance with tax regulations.
