HMRC instructs agents they can stop using late P45’s

In the HMRC agent update 96 published 19th May 2022, revised guidance has been issued in relation to the late receipt of P45s from employees that are too late to be applied to the first payment.

Often employees mislay or employers have not yet issued the P45 to their leaving employee. Equally employees may not have been asked to, or completed the starter checklist by their new employer which is required for all first payments to new employees.

HMRC receive high numbers of new starter records without either the P45 values nor a signed starter checklist declaration. These end being submitted under an emergency unsigned ‘C’ declaration with the application of tax code ‘0T’ on a week 1 / month 1 tax basis., or if the first FPS has new starter information missing, the assumption is made by HMRC.

Prior HMRC guidance allowed for the application of a late P45 and starter checklist information, but only if HMRC had not already issued a tax code!

Sometimes cross-over occurred between the collection of the late starter checklist or P45 and a tax code issued by HMRC in between payment dates. Employers face Determination 80 liabilities where the wrong tax code has been applied with employer being accused and facing pursuit of the employees underpayment of tax where the employee has blamed their employer for getting it wrong!

Agent update 96 – change

However, Agent update 96 issued on 19th May 2022 instructs agents to operate differently and no longer apply late P45’s.

Tell HMRC about a new employee

When adding a new employee onto your payroll system you should use the employees 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 starter checklist available.

After the starter checklist is added and submitted on your full payment submission (FPS) only use any tax code or previous pay or tax changes received directly from HMRC.

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

Late P45 and student loans

So now the only useful information on a late P45 is the continue student loan tick box, but even that is sub-standard in not providing any detail of which plan type or is currently to be continued to be applied, and also requires the employee to answer the student loan questions on the starter checklist.


Is it time that HMRC dropped the use of the P45 altogether – what purpose does it still carry. Individuals have access to their Personal Tax Account (PTA) and new technology should allow more automated electronic exchange of information.

A significant number of new employees do not present the P45 form to their new employer, and many employers are not even asking for one or even the starter checklist. The HMRC guidance has been open to wide interpretation, misunderstanding and just plain poor guidance.

The starter checklist completion is required even if a P45 is provided, with declaration B being made, HMRC will assume a secondary employment and are likely to issue a BR cumulative tax code. Yet it doesn’t even get mentioned in either the original or this new guidance.

PAYadvice.UK 21/5/2022

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