Payroll Advice

Payments after P45 (Part 2)

Regarding the procedures for payments after leaving, can you please advise whether I should open up the Employees Closed record or create a temporary BR tax coded record just for the payment being made?

The answer to your questions is laid out in the HMRC Employer Further Guide to PAYE & NICs CWG 2(2006)on page 15 but can also be dependent on how your payroll system operates (so you may need to seek the advice of the supplier).

The Ceridian payroll system automatically handles payments after leaving by the special use of status indicators "I" (for irregular payment after leaving) and "P" (for periodic or regular payment after leaving). All of the necessary tax code and NICs letter adjustments are all handled automatically without the need for reopening and closing employees.

You should make the payment after leaving against the original employee record, and yes you are almost correct, the values on the P45 will not match the values on the P14 to be submitted (please remember that you do not issue a P60 to an employee who has left prior to 5th April in the tax year), but they will match the values of the P45 and the statement you provide to the employee of the payment after leaving. Also the P14 will report a tax code of BR (non-cumulative).

The official HMRC position is as follows: "You do not need to notify HM Revenue & Customs office when making the extra payment, although you must ensure that the payment is recorded on form P14 at the end of the tax year".


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