Hiring an employee without a P45


When expanding your team, hiring new employees is an exciting but meticulous process. One crucial document in this journey is the P45 form, which provides invaluable insights into an individual’s tax history and aids in seamless payroll setup. But what happens when a prospective employee doesn’t possess a P45? In this blog post, we’ll delve into the implications and procedures involved in hiring an employee without a P45.


Understanding the P45 Form:

Before diving into the nuances of hiring without a P45, let’s grasp the significance of this document. Essentially, a P45 serves as a record of an individual’s taxed income throughout the fiscal year, issued to them upon the termination of employment. When transitioning to a new employer, the P45 assists in setting up payroll accurately, ensuring the correct tax code application.


Steps for Hiring Without a P45:

In scenarios where a prospective employee lacks a P45, certain steps must be followed to facilitate smooth onboarding:

  • Employee Declaration Form: Request the individual to complete an Employee Declaration Form, such as the HMRC Starter Checklist. This form collects essential information regarding employment history, tax code, loan commitments (including student loans), and relevant benefits or deductions.
  • Tax Code Verification: Validate the employee’s tax code by reaching out to HM Revenue & Customs (HMRC) directly or utilizing online HMRC Basic PAYE Tools. This step ensures accurate tax deduction from their wages.
  • Starter Checklist: In some instances, HMRC may advise providing the employee with a Starter Checklist. This additional form allows the employee to furnish details about their financial circumstances, aiding in determining the appropriate tax code.
  • Reporting to HMRC: As the employer, it’s imperative to report the new employee’s details to HMRC using either a Full Payment Submission (FPS) or Employer Payment Summary (EPS). This includes information such as start date, pay details, and allocated tax code.
  • Emergency Tax Consideration: When a P45 is unavailable, the employee may be placed on an emergency tax code temporarily. This code ensures basic tax allowances but may lead to over or underpayment of tax. Adjustment is necessary once the correct tax code is confirmed.


Ongoing Tax Obligations:

Beyond the initial onboarding phase, employers maintain responsibilities concerning employee tax deductions:

  • Deducting the appropriate income tax and National Insurance contributions from wages.
  • Submitting payroll reports to HMRC promptly.
  • Maintaining accurate tax records and documentation.


Why Might an Employee Lack a P45?

Understanding why an employee might not possess a P45 sheds light on their circumstances:

  • It could be their first job, resulting in the absence of tax or PAYE documentation from previous employers.
  • They might be taking on a secondary job, hence not transitioning from one employer to another.


Contact AO Accountants for Payroll Assistance:

At AO Accountants, we understand the complexities of managing payroll, especially when faced with unique situations like hiring without a P45. Our expert team is equipped to navigate these challenges, ensuring compliance and efficiency in your payroll processes. Contact us today for comprehensive payroll assistance tailored to your business needs.


In Conclusion:

While the absence of a P45 may pose initial hurdles, adherence to proper procedures and leveraging professional guidance can streamline the onboarding process. By following the outlined steps and maintaining diligence in tax obligations, businesses can onboard new employees seamlessly, setting the stage for productive collaborations.

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