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.”

Comments
John Stokdyk's picture

CIPP comment

John Stokdyk | | Permalink

 

Helen Hargreaves, Senior Policy and Research Officer at the CIPP welcomed the decision to retain P45s rather than introducing the new Leaver Statement.  “The P45 form is recognised by employers and employees alike, and at a time of great change, removing this form and replacing it with something else would have created unnecessary confusion.  The CIPP has voiced its concerns with HMRC and is delighted to see that HMRC has listened to our views, and those of other interested parties, and come to a solution which addresses those comments.”

With the Real Time Information going into a pilot phase this year the CIPP is running training seminars help payroll professionals prepare for the changes.

 

 

ShirleyM's picture

Hoorah :)

ShirleyM | | Permalink

I could foresee this causing the same problems that the contractor CIS statements cause now that the CIS25 vouchers have been made redundant.

Hopefully, they will put something in the system to ensure everyone knows what is needed for the P45's replacement.