1. A new employer should ask a new employee to copmplete a P46 form if that employee does not have a P45. The P46 form is used to obtain the employee details and should be sent to the local PAYE tax office on the date employment starts. If the employee has ticked box A or B the employer can retain the P46 until the new employee earnings reach the lower earnings limit.
2. P45 forms are in four parts, part 1 is retained by the issuing employer and the employee retains part 1 A and should hand parts 2 and 3 to the new employer. The new employer cannot use the P45 tax details unless both parts are handed over. If either part 2 or 3 of the P45 form is missing then the employee must be asked to complete the Inland Revenue P46 form.
3. The employer retains part 2 and enters details of the employee and previous earnings, tax deducted and tax code into the PAYE records. Part 3 is sent to the PAYE tax office
4. A new employee may hand an employer two P45 forms in which case send both part 3 to the PAYE tax office and use the P45 tax form showing the highest earnings for the PAYE records. If the employer is uncertain contact the PAYE tax office for advice.
5. HMRC tax office issue a P6 form after receiiving the P46 form which advises the employer which tax code is to be used. If the employee produces a P45 late but received prior to receiving the P6 from HMRC an employer should use the tax code, earnings and tax paid to date as shown on the P45, providing the form contains a leaving date in the current financial year. If the P6 form has already been received from the tax office then the P45 is irrelevant, filed and ignored for tax purposes.
6. If there is a significant time gap between the date of leaving and the new start date the first pay date may result in a tax refund. It is important to check previous income tax deducted was correct. The employer should enquire if the employee had any earnings since the P45 leaving date in case there has been other earnings, for example, the employee may have been registered unemployed and received social security payments which would reduce the tax refund required and the social services would be issuing an updated P45 showing the cumulative earnings to date.
7. If the leaving date is different to the week or month number shown on the P45 tax is calculated by using that week or month number for your employer PAYE records but also check that the income tax deducted is correct.
8. When an employee is paid by a new employer in the same pay period as the previous employer, which can happen for example when a previous employer paid weekly and the new employer monthly, the tax deducted may well be higher than normal due to the previous employer already taking account of the employee personal allowance.
9. There are circumstances when a different tax code to that shown on the form may be applicable. If the P45 was dated before 7 September 2008 and the employee joins after 7 September add 60 to the tax code ending with tax code suffix L. For example 543L would be changed to 603L. No change is required if the P45 was dated after 7 September 2008.
If the employees P45 is from the previous tax year the in addition to using the tax code stated that employee should also be put on the emergency code, week one, month one basis using the tax code 543L prior to 7 September and 603l after.
10. The P45 forms can be submitted to the PAYE tax office online provided the employer is registered with HMRC to file PAYE forms online. HMRC provide free online return services for online submissions.
1. There can be a variety of reasons why a new employee does not have a P45 Whatever the reason if a new employee does not provide the new employer a P45 form on the day employment commences then the employer has a responsibility to submit the P46 form.
Completing the Inland Revenue P46 form is the method an employer uses to advise HMRC about the employment of a new employee who does not have a P45.
2. P46 forms should be sent to HMRC on the first pay day they are paid allowing a short period of time for a new employee who does not have a P45 to obtain one.
3. A new rule was introduced from 6 April 2008 if the employee has ticked either box A or B then the P46 revenue form does not have to be sent to HMRC until that employee earnings reach the lower earnings limit. PAYE records still need to be produced by the employer but official notification to HMRC is not required unless the lower earnings level is exceeded.
Should the earnings of the employee continue to be below the lower earnings limit then the earnings and employment would still be advised to HMRC on the P35 annual employers return.
4. If the new employee does not complete the Inland Revenue P46 form before the first pay day then the new employer should complete section one. Section one includes the employee name and address, date of birth and national insurance number.
5. If the employee does not have a national insurance number then the employer must also advise the job centre. It is important to advise the authorities when the employee does not have a number to avoid illegal employment laws. The P46 revenue form can still be submitted to HMRC without a national insurance number who have the facility to trace the number from the information supplied.
While preferable for the employee to sign the P46 form the P46 tax form can be submitted by an employer without the employee signature.
6. If the employee does not complete the P46 the employer must deduct tax using a BR tax code taxing all earnings and excluding personal tax allowances.
7. The tax code to be applied to new employee earnings is dependent upon when the employee joined and which of the boxes A, B or C are ticked on the P46 tax form.
If box A is ticked then apply the emergency tax code which from 6 April 2008 is 543L and after 7 September 2008 and the new tax code 603L. Tax is deducted on a cumulative basis. If box B is ticked then apply the emergency tax code which from 6 April 2008 is 543L and after 7 September 2008 and the new tax code 603. Tax is deducted on a week 1 or month 1 basis.
If box C is ticked then apply the BR tax code. Income tax is deducted on cumulative basis.
If none of the boxes A, B or C are ticked then apply the BR tax code and deduct tax on a cumulative basis.
8. If the new employee has ticked box D then student loan deductions should be made with effect from the first pay date provided the earnings level for deduction of student loans has been reached. Refer to the student loan deduction tables at Student Loan Table to determine how much should be deducted.
9. P46 forms can be filed online by an employer. When the Inland Revenue P46 form is filed online the employer should also have kept a record of how the information submitted was obtained.
10. Before the P46 Inland Revenue form can be filed online the employer must have obtained the facility to do so by registering with HMRC for a PAYE scheme. The HMRC website contains free software that can be used for this purpose.
Both Terry Cartwright & are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
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