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Prior year P45 used for wages

Prior year P45 used for wages

My wife gave her current employer their P45 from their previous job (which ended late in the 2009/10 tax year) so that they could get all her necessary personal details from it. The employer brought in the gross pay and tax as current year and as a result she is paying tax that she shouldn't be paying. They now say they can't do anything to rectify the situation and that she'll have to speak to the local tax office.

I believe that it is the employer's responsibility to correct the error in their records (in the same way as if they'd just pulled figures out of thin air for previous pay and tax or entered somebody else's) so that the cumulative tax coding will then fix the problem automatically. It also seems likely that a P46 will be necessary, though this may confuse things if HMRC have already accepted Part 3 without noticing it related to the wrong year.

Am I correct? Since the employer is convinced they can't do anything , references to show to them would be much appreciated. (assuming they are wrong)


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26th Nov 2010 14:10

I agree with you

Your wife has acted correctly by giving Parts 2 & 3 of her 2009/10 P45 to her new employer and they have acted correctly by submitting Part 3 to the Revenue, whether online or in paper form.  As a P45 has been produced and submitted, it would be wrong to prepare and submit a P46.

The procedure for a new employer to adopt when receiving a P45 for an earlier year is set out on page 2 of the E12 helpbook, PAYE & NIC rates for 2010/11, and on the HMRC website under New Employee: Using the right tax code.  What they say is that if your wife started her new employment before 25 May 2010, the new employer should use the PAYE code from the P45 without any brought forward figures, but if she started after 24 May, the emergency code 647L Month 1 should be used (without any brought forward figures).  If the new employer has made a mistake, it is easy for them to correct it by simply deleting from their payroll system the gross pay and tax figures from the P45.  The problem is that if they simultaneously change her code to 647L Month 1, she would not get a refund of the tax overpaid to date in 2010/11.

Alternatively, wait for the Revenue to issue a cumulative PAYE code for (say) 647L with no brought forward figures.


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26th Nov 2010 19:18

Thanks Euan

I vaguely remember having to use a P46 if a P45 was related to a prior year but that must be a historical thing (or a figment of my imagination. It's been a while since I did payroll regularly)

Thanks for the reference. We shall just have to wait and see how persuasive this is.

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