Q&A: Do you have an employee without a P45?

Q. We have a new employee who did not present a P45 and did not complete the Starter Checklist. Which FPS starter declaration and tax code should we use?

A: HMRC’s guidance in the PAYE Manual says that the starter declaration must be C and the tax code to use is 0T on a week 1 / month 1 basis. Starter declaration C, essentially, sets the employee up on HMRC’s systems with a secondary record, simply because HMRC do not know whether this is a primary employment or a second employment. Tax code 0T W1 / M1 means that the employee is not entitled to any personal allowances.

Use HMRC’s ‘Work out your new employee's tax code’ tool for confirmation. Failure to return the starter checklist is an all-too-common event and the employer should do everything they possibly can to get the checklist completed prior to the employee’s first payday.

About the Author

Martin Johnson

Partner

With expertise in advising family-owned companies on a range of tax, accountancy and business issues, Martin also has an in-depth knowledge of the automotive and property sectors. In addition, he provides advice on inheritance tax planning and financial management to owner-managed businesses.  Martin leads the firm in developing its expertise in the buy-to-let sector, advising both residential and commercial property owners on relevant tax and legislation issues. A further element to Martin’s role is to build Torgersens’ relationships with banks, financial advisors and specialists in commercial and employment law to ensure that the firm’s clients have access to market-leading guidance.  

To get in touch please e-mail martin.johnson@torgersens.com.