When you change jobs this can lead to a change in your tax or national insurance deductions, so you might think you are paying too much tax or are due a refund.
The importance of the P45
A P45 is a form you receive when you leave a job. Your former employer issues this and it details your salary and the taxes you have paid to date in this tax year.
Your new employer will look at your P45 so they know which tax code you should be in, this ensures you do not under or overpay on your tax when changing jobs.
However, sometimes the issuing of a P45 is delayed, and this can mean your new employer uses an emergency tax code.
Here are some examples of situations that could affect your P45:
- Returning to work from benefits: You may receive a P45 from the Job Centre, but you should check the tax code to ensure it is correct. Watch out for Month 1 and Week 1 tax codes, these are temporary codes and may mean you end up paying too much tax. In this case, it would be best if you rang HMRC to get it changed.
- No P45 because of self-employment or career break: Your employer should use a Starter Checklist to work out what tax code to use.
- Employers in Real Time PAYE Information (RTI): If you are in RTI for PAYE, you will not receive a P45. Instead, information about joiners and leavers is included in your RTI returns. You should still be given a Starter Checklist or give your new employer your P45 if you have one from your previous employer.
Tax codes on returning to work can be affected by taxable out-of-work benefits.
You should ensure you can hand over the correct parts of your P45 to your new employer if you have one. You can check if your P45 has been processed correctly by checking your P45 against your new payslips, your previous pay and tax details should match up on both.
If you think your P45 has been processed incorrectly or your tax code is wrong you should take this up with HMRC.
To find out more about Tax Codes then click here: PAYE Tax codes
If you have more than one form of employment click here: PAYE with two jobs
