A P45 is the form you complete when an employee stops working for you. You should also receive one from new employees when they start working for you as it will give a record of their tax status and earnings from their previous employment.
Put simply, a P45 is a record of the pay and the tax deductions of an individual so far in the tax year. A P45 has four parts - part 1, part 1A, part 2 and part 3. When you issue a P45 to a member of staff that is leaving your employment you send part 1 to HMRC and usually give the employee the other three.
A new version of the form introduced in 2009 insists that employers include the employee’s date of birth and gender.
Employers who use HMRC’s free Online Return and Forms – PAYE service can print parts 1A, 2 and 3 of form P45 onto A4 plain paper, when they have submitted the P45 part 1 (employee leaving details) to HMRC online. This facility is also available in some payroll software packages.
The form should be printed onto white A4 paper, using black ink.
You must give employees a P45 when they stop working for you, as they are entitled one by law.