P45

A P45 is the form your employer produces when you stop working for them. It records your leaving date, the tax code in use when you left, and your pay and tax for the current tax year up to that date. It comes in parts: Part 1 goes to HMRC through the payroll submission, and you receive Parts 1A, 2 and 3. You keep Part 1A and hand Parts 2 and 3 to your next employer.

Its purpose is to let the next employer continue taxing you on a cumulative basis instead of starting again from zero. Cumulative coding is what spreads your Personal Allowance evenly across the year, so an employer who holds the previous pay and tax can correct an over-deduction in your first payslip with them rather than leaving you to reclaim it later. Without those figures the employer must use a starter checklist, and depending on which statement you tick you may be put on an emergency code, on BR, or on a code that gives no allowance at all.

A P45 is valid only for the tax year in which it was issued. If you leave in February and start your next job in May, the form belongs to the closed year and the new employer must use a starter checklist regardless of what you hand over. Employers cannot issue a duplicate original, although a new employer can act on the figures if you still hold Part 1A.

Check three things before you file it. The leaving date, because a wrong one moves your pay into the wrong period for Universal Credit. The tax code, because it is the code that will be carried forward. And whether that code carries a week 1 or month 1 marker: a P45 showing a non-cumulative marker tells the next employer to ignore the year-to-date figures, and that is a common reason a new starter stays over-taxed for months.