Guidance on P45 process – an update

28 July 2022

Her Majesty's Revenue and Customs (HMRC) has confirmed an issue with some of the wording used in the June 2022 Employer Bulletin regarding the process involved when a late P45 is received. The incorrect guidance advised if you've received a P45 after sending the first full payment submission (FPS) with the new starter on, you shouldn't update the previous pay, tax, or tax code on payroll software . It should have read that you shouldn't update the previous pay, tax or tax code on payroll software if a new tax code has already been received from HMRC (which is how the guidance and legislation directs).

The below comunication will be included in the August 2022 Employer Bulletin, when it is released.

"First Full Payment Submission for new starters: the importance of using the correct employee addresses — correction 

This article was originally published in the June 2022 Employer Bulletin with incorrect guidance around what to do when receiving a late P45. The corrected guidance is below. 

When completing the first Full Payment Submission for new starters it is important that you obtain and enter your employee’s correct address and post code and use the employee’s P45 information to record their previous pay, tax and student loan (if applicable). 

If the employee does not have a P45 you can use the following  starter checklist for PAYE

If you use the starter checklist to add the employee onto your payroll records and you receive the P45 after you have received a tax code from HMRC, you do not need to update the previous pay, tax, or tax code on your payroll software, only update student loan details (if applicable). 

Using the correct post code and address is important because HMRC uses the post code to verify the employee’s address. If you enter an incorrect address or post code this could result in the employee’s address being changed on our systems leading to correspondence being issued to the wrong address. An incorrect address held on HMRC’s systems may also affect the Department for Work and Pensions ability to process Universal Credit claims and issue correspondence to claimants. 

For further information visit Tell HMRC about new employee."

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