What is P45 and how do I change my tax code?

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When an employee stops working for an employer, the employer is required by law to issue a P45 to the employee. A P45 is a document that confirms the employee's earnings and tax deductions up to the point of leaving the job. 

How tax codes are issued

Employees need to give their P45 to their new employer for the correct tax code to be used. This ensures that the correct tax code is applied when the employee starts their new job. If a P45 is not available during new hire onboarding, an emergency tax code will be applied to the employee's first month. HMRC will then assess the employee's earnings record for the current tax year and provide an updated tax code in the following month.

Please note that the tax code is assigned by HMRC, and no changes to the tax code can be made by Remote. HMRC has all the necessary information on file regarding the employee's income and tax payment history in order to issue the tax code to the new employer correctly.

P45 contains the employee's details of how much tax the employee has paid on their salary in the tax year (6 April to 5 April), how much has been deducted, and the employee's tax code at the time of leaving their last job.

The P45 template can be found here. The form has 4 parts (Part 1, Part 1A, Part 2 and Part 3).

  1. The previous employer sends details for Part 1 to HM Revenue and Customs (HMRC) and gives the employee the other parts.
  2. The employee gives Part 2 and 3 to the new employer (or to Jobcentre Plus if the employee is not working).
  3. Keep Part 1A for their own records.

To receive P45 from Remote at offboarding

After offboarding is complete, the P45 will be issued and uploaded to the employee's Documents tab between the 1st and the 10th of the following month. Please reach back if you don’t receive your P45 by the 11th. The tax code displayed on P45 is determined by HMRC at the time of leaving. Remote does not alter tax codes nor can we change or reissue P45 due to GDPR. If an employee wishes to dispute their tax code, they should contact HMRC directly by phone (0300 200 3300) or online. For full details, please visit the tax codes page on the UK government website.

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