The biggest visible PAYE change

The new A4 P45

Employers can also shortly expect to receive a letter from HMRC reminding them of their obligations to electronically file their Tax Year End submission of the P14 & P35. Also, those with 50 or more employees will be reminded to electronically file their P45 and P46 (in all their various flavors of pension and ex-pat).

Failure to do so will mean that being at risk of penalties and fines ranging from £100 through to £3,000 per quarter.

With the introduction of the new A4 format of the P45, employers should expect to see more of the forms in the new format as they come into use over the next few months. It is worth also noting that the new format can also be used concurrently with the previous A5 version, but only until 6th April 2009.

One of the most visible changes on the form can be found in Part 1 of the P45 “Details of employee leaving work”.  Although minor tweaks have been made to the P45 over the years, such as the introduction of the “continue student loan” tick box, the format of the P45 has generally remained the same.

The change in the form has been brought about to enable the employee to provide additional information to assist with HMRC's quest for better citizen identification. Also, there have been some issues with the spacing and alignment on previous versions of the P45 for use with printers so earlier editions have had to be withdrawn.

Recording more accurate employee data

With the accuracy of HMRC records being a problem in the past, the introduction of e-filing will change this, allowing P45 records to be kept up-to-date and most of importantly, correct. On completion of the form, the HMRC guidance must be applied correctly by employers and equally regulations have been passed into law to ensure that more accurate data is provided. Some of these changes in regulation are already in force, although many HR & Payroll departments may not actually be aware of it.

HMRC are clearly giving out the message that it is no longer acceptable to report incorrect information in relation to the employee, or for that matter pensioner, with regards to Birth date and Gender. The National Insurance number (NINO) is highly desirable for all individuals that have one, but there lies the problem: not everyone actually has a NINO for various reasons, or they have not been issued with one yet.

It is important to remember that the NINO is not proof of entitlement to work in the UK. Both regulations and the Home Office outline the official documents that are required to be provided to prove an employee’s entitlement to work in the UK. Providing a NINO alone will not count as sufficient information to do so, as there have been cases where workers have claimed that they have a valid NINO but actually do not, and instead make one up or in worse cases provide someone else’s details.

As part of taxation regulations, employers are also required to provide details of the employee’s address when submitting P45’s and P46’s.

The new online format of the P45 – black and white and laser printable

The introduction of the downloadable, black and white, laser-printable format of the form has also come into action.  As you know, the standard pre-printed form has coloured shading, but the new online format does not. The new online format can be used by employers who e-file their leaver P45’s with HMRC via the internet or by Electronic Data Interchange and can be produced using a desktop laser printer on plain paper.

Some FAQ’s

So when can the new format of the P45 be used?

The new format has been permitted for use as of October 2008.

When do the old forms get withdrawn?

The old format forms officially are withdrawn from 6th April 2009 when all employers should be using new format forms.

If I receive an old format form after 6th April 2009, can I still use it for an employee?

Certainly accept all genuine-looking P45s. Some will be from previous tax years when the form was absolutely correct to use. Some may be from new employers who for some reason are using the old version of and may not have yet caught up with the new requirements. However, if this is the case, employers must ensure that they obtain the employees birth date, gender and address to electronically report to HMRC.