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Director What Is A P46 From HMRC? A Great Explainer

Tony Dhanjal

what is a p46

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When you start a new job it is important that your new employer is in possession of all the relevant details needed to add you to the payroll and ensure the correct amount of tax is deducted from your salary moving forward. This is usually done when the employee provides the new employer with a copy of their P45 which was issued by their previous employer. 

So what is a P46 and where does it fit into all of this? Well the P46 was used in situations where the P45 wasn’t available. In this article we will explore what is a P46 in more detail and explore the process of onboarding a new employee with HMRC.

What Is A P46?

Although as accountants we are still often asked what is a P46? Or what is a P46 used for? The form itself is actually outdated and has since been replaced by the starter checklist. It is standard procedure for new employees to provide their new employers with a copy of the P45 from their previous employment. The P46 was previously used in situations where a new employee couldn’t provide the employer with a P45 which could be for a number of reasons which we will look at later in the article. 

The P46 was a form completed by the employee with the aim of providing the employer with enough information to be added to the payroll correctly and deduct the correct amount of tax from future payments. The P46 has now been replaced by the starter checklist which captures many similar details but does not need to be submitted to HMRC.

New Starter Checklist

The starter checklist replaced the P46 in April 2013 and since then employers have no longer needed to submit form P46 to HMRC for new employees without form P45. The new starter checklist is made up of 3 main sections:
  1.  Personal details – this section collects the details needed from the new employee in order to add them to the payroll such as name, address and national insurance number.
  2. Employee statement – employees are given the choice of 3 statements to choose from which will identify why they are not in possession on a P45.
  3. Student loans – details of any outstanding student loans are provided here so the employer can consider these when processing the payroll.
The form is often completed by the new employee or on some occasions the employer will ask for the details in another format such as email and transfer them across (both options are fine). The starter checklist needs to be signed and dated by the new employee and returned to the payroll department of the employer for filing. 
Remember the checklist is never actually sent manually to HMRC so neither the employee or employer will forward this on. Instead the details are used by the employer to complete the payroll and HMRC receive the information via the real time information submissions that are made.

Why Would An Employee Not Have A P45?

The majority of employees are able to provide a new employer with a P45 from their previous employment and the P45 provides them with all the details they need before running the first payroll for the new employee but there are a number of situations where this isn’t possible. Some of the most common examples include:
  • This is the new employees first job
  • The new employee has misplaced the P45 that was given to them by the previous employer
  • The previous employer never provided them with a copy of the P45
  • This employment will be the new employees second job in which case they would not receive a P45 from their other employer

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Who Is Responsible?

The P46 form was usually provided to a new employee shortly after they started a new job. Once completed the employer would then pass information from the P46 form to HMRC in time for the first payroll. Again the form P46 has now been replaced by the starter form which serves a similar purpose to it’s predecessor the P46.

The starter form is never actually submitted to HMRC but both the employee and employer must take some responsibility for it’s accurate completion. Ultimately it is the employer who makes the payroll submissions to HMRC but the employee is also signing the form to confirm the details are correct. 

It is certainly in the employees interest to make sure the employer is in possession of the necessary details before the first payroll is run. Without these details the employee could end up overpaying or underpaying tax.

Emergency Tax

 If an employer does not have all the necessary information to add a new employee to the payroll then there is a risk that the employee will pay too much tax. 
The emergency tax code is often applied where HMRC don’t have sufficient information and results in the employee paying more than basic rate tax. Of course this can usually be recovered at a later date by updating the details held by HMRC but this can leave the employee with significantly less take home pay in the meantime.
An emergency tax code can be identified on your payslip as they usually contain the letters W1, M1 or X.

How To Complete The Checklist

 The starter checklist can be found on the HMRC website in 2 formats:
  1.  Online version – the form can be completed online, downloaded, saved and printed for the employee to sign and date
  2. Printable version – a black and white copy of the form can be printed directly from the HMRC website and completed manually
It is recommended that the completed checklists (in whichever format) are retained by employers for the current and previous 3 tax years in case they are ever needed for reference.

What About The P46(car)

The form P46(car) is a separate unrelated payroll form that is used to tell HMRC about any employees or directors that the employer provides cars to for personal use as this creates a benefit in kind. This form should not be confused with the now outdated P46 or it’s replacement the starter checklist.
If you want to learn more about benefits in kind check out our article what is a benefit in kind? gain a better understanding.

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Practice based accountant with over 10 years experience, specialising in SME's, Freelancers and Personal Tax. "I take pride in proactively recognising tax planning opportunities on behalf of clients to help them operate more efficiently."

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