P45 vs P46: Employer Guide

Understanding the difference between a P45 and a P46 remains a routine but important issue for HR professionals and business owners managing payroll, onboarding and final pay. Although the P46 has been replaced in practice, the terminology continues to surface when employees join without tax history documents or when legacy payroll references appear in workforce queries. Clarity on how these forms operate, and the compliance duties tied to them, ensures accurate PAYE deductions, prevents tax code errors and avoids delays in issuing correct final pay.

What this article is about
This article explains the role of the P45 and the historical P46, their differences, and how each affects HR processes when an employee joins or leaves. It sets out when a P45 must be issued, the modern equivalent of the P46, and the payroll steps required to keep tax deductions lawful and accurate. The guide is written for HR professionals and business owners who manage PAYE compliance, ensuring that new starters are placed on the correct tax code and leavers receive accurate final pay documentation.

Section A: What is a P45?

A P45 is the key PAYE document an employer must provide when an employee leaves employment. It plays a central role in ensuring the employee’s next employer or the Department for Work and Pensions applies the correct tax code and continues deducting tax accurately. For HR professionals and business owners, the P45 is a statutory requirement under PAYE Regulations, forming part of the final pay process whenever an employment contract ends.

1. Definition and purpose

A P45 is the official leaver document issued when an employee stops working for an organisation. It confirms pay and tax deducted in the current tax year up to the employee’s leaving date. Its purpose is to ensure continuity so the employee does not overpay or underpay tax when they start their next job or claim certain benefits.

2. When employers must issue a P45

Employers must issue a P45 every time an employee leaves employment, regardless of the reason for leaving. This includes resignations, dismissals, redundancies, fixed-term contract expiries and the end of casual or temporary engagements. A P45 must be issued after the employee’s final pay is calculated and processed through payroll, and it should be provided as soon as reasonably practicable after the final payroll run. HR should ensure the document is provided promptly because the next employer cannot rely on estimated tax information where a valid P45 exists.

3. Information contained in a P45

A P45 includes the employee’s tax code, PAYE reference, total pay and total tax deducted in the current tax year, the employer’s details and the date employment ended. It is split into parts for the employee, the new employer and HMRC. HR teams should ensure the data is correct at the point of issue as inaccuracies can trigger emergency tax codes for the employee’s next role or lead to reconciliation issues with HMRC.

4. HMRC requirements and payroll implications

Issuing a P45 is part of the employer’s PAYE reporting duties. Final pay must be submitted in the FPS (Full Payment Submission) and the P45 must reflect the information already reported to HMRC. Any error on a P45 becomes an HMRC compliance risk and can require amending payroll submissions. While an employer cannot generate a replacement P45 with altered figures, they may reprint the original P45 if it has been lost or misplaced and, where corrections are needed, provide a letter confirming the corrected pay or tax figures and update payroll submissions through RTI as required.

Section A Summary

A P45 is a statutory document issued when an employee leaves, designed to ensure the next employer applies the correct tax code and pay details. HR must produce it accurately and as soon as reasonably practicable after the final payroll run as part of the final pay process, as it forms a key compliance record within the PAYE system.

Section B: What is a P46?

Although the term “P46” is still widely used informally, the form itself is no longer part of the PAYE system. Historically, the P46 served as the mechanism for collecting starter information when a new employee joined without a P45. HMRC has since replaced it with the “Starter Checklist”, which employers must use to determine the correct tax code for new starters. HR professionals still encounter references to the P46 in employee queries, legacy payroll processes and outdated templates, making clarity on its current status important for compliance and accurate onboarding.

1. Historical role of the P46

Before Real Time Information (RTI) reforms, the P46 was used to gather information about an employee’s employment status and previous pay when they could not provide a P45. It informed HMRC of a new starter’s circumstances so the appropriate tax code could be set. The form acted as a provisional record until HMRC received full earnings data. Its use ended with the shift to RTI and the modern Starter Checklist, which collects the same information but does not require submission to HMRC because starter data is now transmitted through the employer’s first FPS submission.

2. Replacement by the “Starter Checklist”

The P46 has been formally withdrawn and replaced by HMRC’s Starter Checklist. Employers must rely on the checklist to allocate the correct tax code for any employee who does not present a P45. The checklist contains the key statements about other jobs, pensions and student loan obligations. The information is used internally by payroll to assign the correct initial tax code, which is then reported via RTI. A signature is not legally required, although employers commonly obtain one for audit purposes.

3. When a P46 (or its modern equivalent) is used

Where an employee joins without a P45 or cannot obtain it from a previous employer, HR should issue the Starter Checklist immediately. This applies to first-time workers, employees returning after extended breaks and individuals transitioning between jobs where the previous employer has not yet processed the P45. HR teams should ensure the checklist is complete and retained securely as part of PAYE records. The absence of a P45 requires careful handling to avoid applying an incorrect temporary or emergency tax code.

4. How HR processes new starters without a P45

Payroll will use the Starter Checklist to assign the correct tax code based on the employee’s declaration. The code is then included in the next FPS submission to HMRC. HMRC may subsequently issue a P6 notice or RTI tax code update, which employers must apply in the next payroll cycle. HR should clearly inform the employee that their first payslip may use a temporary or emergency tax code until HMRC updates the code based on the FPS information. Early communication reduces concern and prevents unnecessary complaints about perceived over-deductions.

Section B Summary

The P46 is obsolete, but its function survives through the Starter Checklist. HR must use the checklist whenever new employees do not produce a P45 and must ensure starter information is complete and retained. Although not statutory in itself, the checklist enables employers to meet their statutory PAYE obligation to operate the correct tax code.

Section C: Key Differences Between P45 and P46

Understanding the differences between a P45 and a P46 is central to accurate payroll administration and PAYE compliance. Although the P46 is no longer in active use, it still appears in workforce conversations, meaning HR must distinguish between the legal reality and the legacy terminology. The P45 remains a statutory leaver document, while the P46 has been replaced by the Starter Checklist, which is an onboarding tool rather than a formal HMRC form.

1. Legal status and current HMRC use

The P45 is still a required document under PAYE Regulations and must be issued whenever an employee leaves employment. HMRC expects the information on the P45 to match the final RTI submission for the employee.
The P46, however, has no legal standing and is no longer recognised by HMRC. The Starter Checklist has replaced its function, and although the checklist itself is not a statutory document or submitted to HMRC, employers have a statutory obligation to gather and apply starter information to ensure PAYE is operated correctly.

2. Timing: joiners vs leavers

A P45 applies when an employee leaves. It captures final pay for the current tax year and is essential for the employee’s next employer.
A P46 (historically) applied when an employee joined without a P45. Today, the Starter Checklist covers the same scenario. The checklist supports onboarding, not offboarding, and is never used for leavers.

3. Tax code and payroll impact

P45 information directly sets the correct tax code and pay data for the employee’s next employment. If errors are present, the next employer may apply an incorrect code, causing over-deductions or under-deductions of tax.
The P46 or Starter Checklist helps determine the appropriate temporary or initial tax code. Because checklist declarations rely on the employee’s statements, employers must ensure the information is completed accurately. Incorrect declarations can trigger emergency tax codes until HMRC corrects them via RTI-issued tax code updates.

4. Employer risks when the wrong form or process is used

Using the wrong form or failing to collect the required starter information exposes employers to payroll inaccuracies, HMRC queries and employee disputes. If a P45 is not issued, or if starter information is missing or inaccurate, HR may need to reprocess payroll, correct RTI submissions or respond to complaints about emergency tax coding. Compliance failures can also cause delays in final pay or onboarding, affecting employee experience and operational efficiency.

Section C Summary

The P45 is a statutory leaver document that must be issued, while the P46 no longer exists and has been replaced by the Starter Checklist for new starters. Their functions differ entirely, and HR must apply the correct process to ensure accurate tax codes and lawful PAYE reporting.

Section D: HR and Payroll Compliance

HR teams and business owners carry specific duties under PAYE to ensure that both leaver and starter processes are handled accurately. The distinction between P45 and the now-withdrawn P46 shapes how employers manage payroll records, apply tax codes and communicate with workers at the point of leaving or joining. Sound compliance avoids tax errors, disputes and HMRC intervention, reinforcing the employer’s duty to maintain accurate reporting under Real Time Information (RTI).

1. Required records and retention

Employers must keep payroll records for at least three years after the end of the tax year they relate to. This includes copies of P45s issued and any starter information used when a new employee joins without one. Although the Starter Checklist is not submitted to HMRC, it remains part of the employer’s PAYE records and must be stored securely. Accurate record-keeping helps resolve queries about tax deductions, verify information sent via RTI and demonstrate compliance in the event of an HMRC audit.

2. Correct application of tax codes

Where a valid P45 is provided, payroll should apply the tax code shown unless HMRC issues an alternative instruction. If the employee does not provide a P45, payroll must use the Starter Checklist to assign the correct temporary or initial tax code. Using the wrong code risks over-deducting or under-deducting tax and may require issuing corrected payslips or adjusting future payroll submissions. Employers should monitor RTI notifications because HMRC may issue updated codes, typically through a P6 notice, which must be applied in the next payroll run.

3. Preventing over-deductions or under-deductions

Errors often arise when employers either fail to issue a P45 promptly or onboard a new employee without collecting complete starter information. Without accurate tax data, payroll may need to apply an emergency tax code, causing cashflow issues for the employee and creating administrative work for HR later. Employers reduce risks by ensuring leavers receive accurate P45s, new starters complete the checklist before their first payday and any HMRC code changes are applied immediately in subsequent payroll cycles.

4. Communication with employees

HR teams should explain to leavers how the P45 supports a smooth transition to their next job and highlight the importance of retaining it. For new starters without a P45, clear communication helps manage expectations about temporary tax codes, potential emergency tax and possible HMRC adjustments. Early clarification reduces complaints, avoids misunderstandings about payroll decisions and supports a transparent approach to PAYE administration.

Section D Summary

Compliance depends on accurate records, correct tax code application and clear communication with employees. HR must treat the P45 as a statutory requirement and the Starter Checklist as the modern onboarding tool that replaces the P46. Ensuring both processes run consistently prevents payroll errors and maintains PAYE accuracy.

FAQs

Is the P46 still valid?
No. The P46 has been withdrawn and replaced by HMRC’s Starter Checklist. The checklist serves the same purpose but is not submitted to HMRC. Employers must use it when a new employee does not have a P45.

What should HR do if a new employee has no P45?
Provide the Starter Checklist and ensure it is completed before the first payroll run. Payroll then uses the information to assign the correct temporary tax code until HMRC issues an updated code via RTI.

Can an employer reissue a P45?
Employers cannot generate a replacement P45 with altered figures. They may reprint the original P45 if it has been lost or misplaced. If corrections are needed, they must provide a written statement confirming the updated pay or tax figures and make any required RTI adjustments.

What tax code should be used without a P45?
The tax code should be based on the employee’s declaration on the Starter Checklist. If information is incomplete, payroll may need to apply an emergency tax code until HMRC issues a corrected code through a P6 notice or RTI update.

What happens if payroll errors occur because of missing or incorrect forms?
Employers may need to amend RTI submissions, issue corrected payslips or adjust future payroll. Prompt corrections reduce the risk of HMRC queries and employee disputes, especially where emergency tax codes have been applied.

Conclusion

Understanding the difference between a P45 and the now-withdrawn P46 is essential for HR teams managing onboarding, offboarding and PAYE compliance. The P45 remains a statutory document that employers must issue every time an employee leaves, ensuring the next employer applies the correct tax code and continues accurate tax deductions. The P46 no longer exists, but its former role is fulfilled by the Starter Checklist, which employers must use whenever a new employee starts without a P45.

For HR professionals and business owners, the practical task is to ensure that leaver and starter processes are consistent, accurate and aligned with HMRC requirements. Keeping complete records, applying tax codes correctly and maintaining transparent communication with employees helps prevent payroll errors, avoids HMRC intervention and supports a compliant approach to final pay and onboarding. Employers must also ensure accurate reporting under RTI, including applying P6 notices and updated codes promptly.

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