06 Oct 2022

What is a P46 and when do you need one?

When an employee joins a business they will usually provide the employer with their P45 document. Occasionally, the employee may not have a P45 in which case they are required to complete a new starter checklist, which was previously called a P46.

Man on desk signing a contract

What is a P46 form?

The P46 form was used by employees who didn’t have a p45 when starting their new employment. The P46 form was replaced by the new starter checklist, which contains the following 5 sections

  • Employee personal details
  • Employment start date
  • Employment statement, choose from one of the following three statements
    • “This is my first job since 6 April and since 6 April I’ve not received any pension or state benefit”
    • “I receive no pension and either this isn’t my first job since 6 April and/or I’ve received a state benefit”
    • “I have another job or receive a pension”
  • Student loan details. The important thing for an employee to remember is which repayment plan they are on. For example, for those that studied in England, Wales or NI prior to 1st September 2012, they are on plan 1. For students who studied in England or Wales on or after 1st September 2012, they are on plan 2
  • Declaration

Is the new starter checklist the same as a P46 form?

Whilst the term p46 form is still widely used, it has been officially replaced by HMRC with the new starter checklist. The p46 form was required to be submitted to HMRC, however, the new starter checklist does not need to be sent to HMRC. Instead, it’s a handy guide to add new employees to payroll with the correct tax code and to help fill in the first FPS(full payment submission)

When does a new starter checklist need to be completed?

The reasons for completing the new starter checklist are below and remain the same as the reasons for needing to complete the p46 form

  1. If the employee has a student or postgraduate loan
  2. If the employee’s personal details don’t match those shown on the p45 form
  3. The employee doesn’t have a p45 form e.g. it’s their first job
  4. If the employee has been sent to work temporarily in the UK by their overseas employer

What is a P45 form?

A p45 form is given to an employee when they leave their previous employment. It contains the following bits of information

  • Total gross income paid during the current financial year
  • Total tax paid up to the date of leaving employment in the current financial year
  • Tax code at the point of leaving

P45 forms help to make sure that employees are on the correct tax code when they start their new employment. It’s important that this information is checked to ensure that it’s correct A p45 form is made up of four part

  • Part 1 is passed from the previous employer to HMRC
  • Part 1a is to be kept by the employee for their own records
  • Part 2 & 3 are sent to the new employee who will keep one and send another to HMRC

What happens if an employee doesn’t provide P45 or P46 form information?

From an employee perspective, they may find themselves on an emergency tax code. An emergency tax code will most commonly be one of the following 1257 W1 , 1257 M1 or 1257 X, which means an employee will be taxed on all income above the personal allowance threshold of £12,570. HMRC will put an employee on this if they don’t have the required information from a p45 or starter checklist. An emergency tax code may result in the employee not benefiting from any backlog of allowance they were owed in the financial year e.g. due to being out of employment.

From an employer perspective, if they’re waiting for p46 information from a new joiner before closing a payroll, they could be at risk of delay, which could then result in penalties from HMRC.

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