Employers – Frequently Asked Questions
General
- What does it mean when a code number says week 1 or month 1?
- I took on a worker who says he is self-employed. Does that mean I don't deduct tax and NICs?
- When do I have to start deducting NICs from my employees wages?
- My new employee only gave me part 1A of the form P45. It has pay, tax, week number and a tax code on it. Can I use this?
- I submitted a P45 Part 3 to HMRC that included incorrect pay and tax details - what should I do?
- An existing employee wants to give me a P45 Part 3 from a second job they’ve just left – can I accept it?
- I have already sent in a P46 for a new employee and received a P6, but now the employee has given me a P45 Part 3 - can I destroy it?
- What steps do I need to take if I sent you a P45 Part 1 for an employee that I thought had left but they hadn’t?
- I am completing form P45 Part 3 for a new employee but I’m not sure if they will be paid before the next 5 April – how do I show this?
- Can I continue issuing tax rebates to staff either on termination of employment and/or after the last pay day of the tax year, if there are no earnings every week?
- I need to send HMRC a P45 Part 3 or P46 but the employment start date and the date of the first payment do not always coincide – what do I need to do?
- My P45 Part 3 submission has been rejected because I have shown a cumulative tax code but haven't provided any previous pay or tax as the values relate to the previous tax year. The employee commenced within the first six weeks of this tax year – can you please advise what I need to do in order for P45 Part 3 to be accepted?
- I sent a P46 for someone I thought would start an employment with me but didn’t, what should I do to avoid this scenario arising again?
- Can I accept P46 information from my employee electronically?
- Do I need a medical certificate before paying SSP?
- My accountant/agent completes and files my return why have you charged me penalties?
- I am making a pension payment for the first time that includes some previous outstanding monthly pension payments. How do I tax this payment?
Q. What does it mean when a code number says week 1 or month 1?
A. When a code is operated on a week1/month1 basis this means that you use week 1/month 1 of the Tax Tables on each weekly or monthly pay day. This basis is non-cumulative, which means you don't add the pay and tax to the previous weeks or months figures of pay and tax.
Q. I took on a worker who says he is self-employed. Does that mean I don't deduct tax and NICs?
A. As you are paying the wages you must decide whether the worker is employed or self-employed. Obtain a copy of guide ES/FS2 (PDF 60K) which will help you decide. If you are unable to decide contact the Employment Status Inspector at your PAYE office for guidance. If you decide that the worker is self-employed he is responsible for his own tax and NICs and you should not deduct them from the payment. If you decide that he is an employee, deduct tax and National Insurance in the normal way.
Q. When do I have to start deducting NICs from my employee's wages?
A. NICs should be deducted from an employee's wages providing
- they are over age 16
- they are under state retirement pension age
- their earnings are above the weekly, or equivalent, Earnings Threshold (ET)
More information about deductions
Q. My new employee only gave me part 1A of the form P45. It has pay, tax, week number and a tax code on it. Can I use this?
A. No, an employer needs parts 2 and 3 of a P45. Give your employee part 1A back and ask for parts 2 and 3. If your employee is unable to provide these you must use the form P46.
Q. I submitted a P45 Part 3 to HMRC that included incorrect pay and tax details - what should I do?
A. You should include the correct pay and tax on your P11 Deductions Working Sheet but notify HM Revenue & Customs (HMRC) of the error immediately either by letter or telephone. Do not submit a further P45 Part 3.
Q. An existing employee wants to give me a P45 Part 3 from a second job they’ve just left – can I accept it?
A. No. Please advise the employee to send the P45 Part 3 to their local office. The local office will review the code and issue an amended one if appropriate.
Q. I have already sent in a P46 for a new employee and received a P6, but now the employee has given me a P45 Part 3 - can I destroy it?
A. You should check the P45 Part 3 for any relevant student loan information and if the student loan indicator is shown, commence repayments, if you haven’t already done so or received notification from your HMRC office to stop. You can then destroy the P45 Part 3. Do NOT include the pay and tax figures shown on the P45 Part 3 in your tax calculations. Operate the code number shown on the P6 coding notification together with any pay and tax that have been included on that form.
Q. What steps do I need to take if I sent you a P45 Part 1 for an employee that I thought had left but they hadn’t?
A. You should send a letter to the PAYE tax office confirming that the P45 Part 1 was sent by mistake. You should also destroy all other parts of the form.
Q. I am completing form P45 Part 3 for a new employee but I’m not sure if they will be paid before the next 5 April – how do I show this?
A. You should enter ‘P’ in box 11 or set the indicator if you are filing online and know the employee will not be paid between the start date and 5 April. Leave the box/indicator field blank if you are unsure.
Q. Can I continue issuing tax rebates to staff either on termination of employment and/or after the last pay day of the tax year, if there are no earnings every week?
A. If a tax rebate is due at the date of termination or at the last pay day of the tax year you should make it. No further rebates should be given after either of these dates.
Q. I need to send HMRC a P45 Part 3 or P46 but the employment start date and the date of the first payment do not always coincide – what do I need to do?
A. Send the P45 Part 3, showing the employment start date, to us as soon as a new employee hands one in (unless the circumstances at Q3 above apply). If you have not got a P45 Part 3 from your new employee then you should send us a completed form P46, again showing the employment start date, when the first payment is made to the employee.
Q. My P45 Part 3 submission has been rejected because I have shown a cumulative tax code but haven't provided any previous pay or tax as the values relate to the previous tax year. The employee commenced within the first six weeks of this tax year – can you please advise what I need to do in order for P45 Part 3 to be accepted?
A. You should submit the P45 Part 3 including the previous pay and tax details even if they relate to a previous tax year. However, you should not include the amounts on your P11 Deductions Working Sheet for the current year.
More information about which tax code to use
Q. I sent a P46 for someone I thought would start an employment with me but didn’t, what should I do to avoid this scenario arising again?
A. You should only send a P46 when making the first payment to the employee even if the first payment is not made until some months after the start date. The P46 should show the ‘start’ date not the date the first payment is made.
Q. Can I accept P46 information from my employee electronically?
A. It is up to you to obtain the information in a way that best suits your business need. The information may be obtained from the employee either online or by using your own stationery as long as you keep a record of where the information came from.
Q. Do I need a medical certificate before paying SSP?
A. Employers do not require medical evidence before paying SSP. If an employee satisfies all the conditions to receive SSP and the employer has no reason to doubt the incapacity, SSP can be paid without medical evidence.
Q. My accountant/agent completes and files my return why have you charged me penalties?
A. Section 98A TMA 1970 allows us to charge penalties, and these are directed to the person who is responsible for completion of the end-of-year returns. As shown in Regulation 43(1) Income Tax Employments Regulations 1993 this is the employer's responsibility.
Q. I am making a pension payment for the first time that includes some previous outstanding monthly pension payments. How do I tax this payment?
A. You should tax the payment as one lump sum using the appropriate tax code number on a week 1 or month 1 basis. For information about which tax code to use, please refer to chapter 2 of the Employer Helpbook CWG2 Employer Further Guide to PAYE and NICs.
