P45s escape the pink slip
The traditional P45 form summarising tax paid at then the end of an employment will remain in use after a change of heart at HMRC.
As part of the move to the Real Time Information system for PAYE during 2013-15, under which employers will submit data electronically to HMRC when employees leave and join, the P45 was due to be replaced by a “leaver statement”.
But HMRC’s acting director general for personal tax Stephen Banyard commented on Monday, “Employers told us to keep the P45 – which is exactly what we have done.”
Under the revised plan publicised on Monday, HMRC will P45s will continue to be issued to the employee to take to their next employer. Employers will then submit the leaver and starter information to HMRC as part of their normal RTI submissions.
The CIOT wrote to HMRC in November for any change in the rules to be held back until RTI has bedded in. Colin Ben-Nathan, chairman of the CIOT employment taxes sub-committee said HMRC’s decision was a “sensible” response reduce disruption and confusion around the introduction of RTI.
“The removal of the requirement to provide a P45 was well intentioned but doing so this year would have been premature and potentially confusing for employers, employees and even government itself,” he said.
“Introducing an alternative document alongside the P45 without an adequate educational process and amendment of rules and training manuals would be confusing and likely to increase bureaucratic burdens, the opposite of the government’s intentions.”