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.