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can P45 be given to leaving employee before

leaving date?

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Quick question but no answer found. Can an employer issue P45 to leaving employee before the actual leaving date comes? E.g. leaving date 21/2/22 but employee wants P45 now to give to new employer. The employee will be paid by the employer on 28/2/21. Silly but are there any legal barriers?

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Scalloway Castle
By scalloway
09th Feb 2021 11:02

Have you filed the RTI data for the employee's final pay?

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By Sandnickel
09th Feb 2021 11:29

I'm thinking along the same lines as Scalloway, I think.

P45 given to new employer with gross & tax that doesn't match RTI filing at HMRC could cause an issue especially if new employer files an RTI before the old employer.

I'd issue the P45 with the last payslip and pay.

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By SteveHa
09th Feb 2021 11:44

I see no reason why the payroll couldn't be run and the FPS filed now to facilitate the issue of the P45, unless there are other restricting factors (e.g. variable pay/hours worker and final pay not yet ascertained).

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Replying to SteveHa:
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By tom123
09th Feb 2021 12:00

Generally, I would not recommend posting 'part' RTI returns.

Not even sure if my software permits it.

Just do everything in the normal time frame in one go, would be my advice.

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Replying to tom123:
By SteveHa
09th Feb 2021 12:10

I meant the whole payroll, not a part payroll.

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By Wanderer
09th Feb 2021 11:48

Don't do it.

Creates extra hassle. Just process the pay for the normal pay date and issue the P45 at that time.

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By I'msorryIhaven'taclue
09th Feb 2021 12:07

The leaving date's the 21st, so I vote for producing a P45 on Monday 22nd.

Sounds as if there's a job overlap; if so, the employee is going to have to declare (on the new starter form) whether the new job is a second employment or an only employment. I'd steer clear of any involvement in that by doing things by the book: 21st, and not before.

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Replying to I'msorryIhaven'taclue:
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By Paul Crowley
09th Feb 2021 12:15

Agree by the book
HMRC do not like early RTIs as it messes up universal credit
If employee uses up February allowance then best new employer BRs for the odd week

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By Hugo Fair
09th Feb 2021 12:57

"Can an employer issue P45 to leaving employee before the actual leaving date comes?" ... Yes, but only if 'final payment' for the employment has been reported via an FPS.

This nonsense comes about because of the half-a**ed way in which RTI was designed - in particular the belief by HMRC at the time that it 'replaced' the need for a P45. Of course it DID replace the need to file a P45 with HMRC, but not the need to issue a P45 to the ex-employee (two actions that used to be concurrent).

A process for the new employer (and the benighted employee) was then cobbled together around the introduction of the Starter Checklist ... whereby the details on the P45 can be used by the new employer if they are received before the cut-off for their 1st pay run with the new employee (a rare occurrence); otherwise a set of rules will determine the tax code/basis to be used (until later notification by HMRC when they finally manage to get the individual's employment record sorted out at their end).

On the basis of the (limited) info in the OP, the lack of a P45 (before 1st pay processed by new employer) should currently result in the new employee being given a tax code of 1250L BUT on a Week1/Month1 basis (i.e. ignoring earnings and tax paid YTD). The idea (from an HMRC perspective) is to err on the side of over-taxation ... and trusting on a later 'corrected' tax-code to sort out the position for the year.

Leaving aside the unfairness (as perceived by the transferring employee), this does not work too well in two common circumstances:
a) when employments change too late in the tax year for all those HMRC processes to complete in time for the corrected tax-code to reach the new employer in time for them to use it in a month of the same tax year;
b) when the new employer files an FPS (containing the new employee) BEFORE the FPS (showing the leaving date) from the old employer has been both submitted to AND processed by HMRC.

So, in short, there is nothing to stop you issuing the P45 early if your payroll (as many do) will support the early filing - but ...
... the RTI system is far from perfect even when all parties follow the 'rules' (which are mostly guidance not actual rules), and doing anything that reeks of logic but circumvents HMRC's expected procedures usually just leads to pain!

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By richard thomas
09th Feb 2021 21:45

As usual I only set out what the law requires.

Regulation 36(1) of the PAYE Regulations says that: "On ceasing to employ an employee in respect of whom a code has been issued, the employer must complete Form P45". Reg 36(2) provides that "the employer must then-- (b) provide Parts 1A, 2 and 3 to the employee.

That strongly implies to me that the employer should not do this until the actual leaving date, but if the employer is able to put the details of pay and tax up to the date of leaving it cannot be argued that there is anything wrong in principle with giving it before the leaving date.

Giving a P45 Parts 2 & 3 to a new employer is only compulsory if that new employer is not an RTI employer - reg 40(1) and (6).

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Replying to richard thomas:
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By Paul Crowley
09th Feb 2021 23:18

try telling that to the new employer
who will ALWAYS request p45

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Replying to Paul Crowley:
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By richard thomas
10th Feb 2021 06:52

I’m sure you’re right at least about the private sector. My only experience is personal or that of friends and relations which is that public sector employers (especially the NHS) do not give a P45 and the new employer, and particularly public sector pension payer, do not ask for one, even before RTI made it voluntary.

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Replying to richard thomas:
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By Hugo Fair
10th Feb 2021 12:15

I'd never dare to query anything where you "set out what the law requires" ... but I'm astonished to hear you believe that in practice "public sector employers (especially the NHS) do not give a P45."

My clients are almost exclusively in the public sector (albeit not within the NHS) and to the best of my knowledge ALL of them comply with Regs 36(1) and 36(2) of the PAYE Regulations - as referenced by you in your previous post. [Being a pedant I can only be sure about the 'completing' part - whereas the 'providing' action is only part of the standard operating procedures with which I hope they comply].

And, if only to emphasise my pedanticism, RTI did not make it (a new employer asking for the previous employment P45) voluntary. The request got subsumed into the questions within the New Starter Checklist that the new employer is supposed to get the new employee to complete ... so that a Tax code/basis can be allocated until a notice is received from HMRC ... with a decision-tree that reflects whether the new employee was or wasn't able to provide such a P45.

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Replying to Hugo Fair:
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By richard thomas
10th Feb 2021 13:21

Two points. One, please dare - others have and have corrected my understanding of the law.

Two, I do not believe that it is a general practice of public sector employers to not give a P45: it is, as I said, my limited experience of what happened (or didn't happen) to me and friends, particularly when there is retirement (whole or partial with re-engagement) and the taking of a pension. I have also seen a few examples in my judicial career of this and other failures happening in the NHS particularly.

As to your last paragraph, I am aware of the requirements in paras 35 to 44 (especially 41) of Sch A1 of the PAYE Regs. What para 41 does not require is that the new employer obtains pay and tax details of the old employment, and reg 40(6) says that where the new employer is an RTI employer, the employee "need not comply" with reg 40(1) - that sounds like it being voluntary to me.

That an employee need not give a P45 to a new employer will not be known to 99.99% of employees, so if the employers asks for a P45 they are likely to hand it over if they have one. The employee can also refuse to supply pay and tax details even with a non RTI-employer.

And nothing in the New Starter Checklist asks for pay & tax details either.

Again I stress I'm not trying to say what happens in practice beyond my specific knowledge.

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Replying to richard thomas:
By SteveHa
10th Feb 2021 13:27

It's likely that a P45 was produced, but was simply passed straight over to the pension provider, effectively cutting out the middle man (the retiring employee).

Having said that, the employee would still need Part 1A for self-assessment purposes, otherwise how do they know what to report on their SATR?

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Replying to Hugo Fair:
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By vstrad
11th Feb 2021 18:03

Would it be pedantic to point out that it's pedantry, not pedanticism? :-)

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Replying to vstrad:
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By Hugo Fair
11th Feb 2021 20:40

No, but you would be incorrect to do so.
According to Collins English Dictionary (others are available), 'pedanticism' is defined as "pedantry; an instance of being pedantic".
So you're correct that I could have used 'pedantry' instead, but 'pedanticism' is just as correct - and arguably slightly more nuanced in the context in which it was used.
I will however concede that this discussion is getting mighty circular and may well shortly re-enter it's own fundament!

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Replying to richard thomas:
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By Paul Crowley
11th Feb 2021 19:01

I seem to remember that the old P45 was send in by paper, so needed to be produced as 4 carbons with the last one or two unreadable.
Other side, new employer, was a P46 or a P45 carbon ( one of the unreadable copies) send as paper Inland revenue

Nothing much happened in year as Inland revenue just received some random payments and could not start work until the paper P60s and a p35 arrived

Given it is all electronic and supposedly real time the effect of no P45 really should now be be trivial.
No humans needed and codings generated by the system

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Replying to Paul Crowley:
Pile of Stones
By Beach Accountancy
11th Feb 2021 10:29

I can't remember the last time a client's new employee gave me a P45. New starter guesslist is the way to go every time :(

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Replying to Beach Accountancy:
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By Paul Crowley
11th Feb 2021 18:45

Usually a bit difficult to get them quickly enough
New starter checklist does however have the problem that self employment is ignored so newman get full coding and a shock at tax return time

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