Contents
A P46 form is a tax document which needs to be filled out by the employer to ensure that new employees pay the right amount of income tax.
In this article, we will answer the question ‘What is a P46?’, including when it needs to be filled out and the difference between a P45 and P46 form.
What is a P46?
If you’re a small business or a new startup, you may have some questions surrounding payroll and how you need to proceed with specific documents, including “What is a P46 form in the UK and why do I need to fill one out?”
Essentially, a P46 form was a document which was required to be completed by an employer when an employee started a new job. It was only needed if the employee hadn’t been given a P45 form by their previous employer – which we will explain in more detail later on.
While many people understand the P46 meaning, the process has now been replaced by a document called a Starter Checklist, so it’s important to understand the update.
Although they need much of the same details, the P46 form was only required when an employee did not receive a P45, whereas the Starter Checklist can be used for all new employees.
What is a P45?
If you’re a small business or a new startup, you may have some questions surrounding payroll and how you need to proceed with specific documents, including “What is a P46 form in the UK and why do I need to fill one out?”
Essentially, a P46 form was a document which was required to be completed by an employer when an employee started a new job. It was only needed if the employee hadn’t been given a P45 form by their previous employer – which we will explain in more detail later on.
While many people understand the P46 meaning, the process has now been replaced by a document called a Starter Checklist, so it’s important to understand the update.
Although they need much of the same details, the P46 form was only required when an employee did not receive a P45, whereas the Starter Checklist can be used for all new employees.
What is a P45?
As mentioned, a P46 form needed to be filled out if a P45 form was not provided by the new employee. A P45 form is a document which acts as a tax record for the employee and should be given to the employee when they leave a company. It ensures a smooth onboarding process for the new employee and helps to avoid mistakes to tax codes which will need to be rectified further down the line. Find out more in this guide: Getting P45, P60 and other forms: employer guide.
Is there a difference between a P45 and P46?
Yes, there is a distinct difference between a P45 and P46 form, although the purpose of both documents is the same – to make sure a new employee is put on the correct tax code.
An employee will receive a P45 form from their employer when they leave a job. It will show their tax code and earnings. A P46 form was a document that needed to be completed if the employee did not have a p45.
To sum up, the first option is a P45 to be provided by the employee, and if this isn’t available, the new employer would complete a P46 form.
When do you need to fill out a P46?
A P46 form needed to be completed when your new employee starts their employment with your organisation, in the following scenarios:
- This is their second job
- Their previous employer hasn’t provided a P45 form
- They don’t immediately have their tax details
A P46 form did not need to be filled in if the new employee was able to provide a P45. However, as the Starter Checklist has now replaced the P46 form, this isn’t as important to be aware of.
How does an employer complete the P46/Starter Checklist?
While it may seem confusing at first, filling out the Starter Checklist is easy to do, and you should be able to do this without any problems. You will need the following personal information of your new employee:
- Full name
- Address
- Date of birth
- National Insurance Number
- Start date
You will also need to know if they
- Pay into a student loan (and what plan they are on)
- Pay into a pension
- Have another job
- Are receiving any benefits
. This will help to determine the correct tax code. To find out more information about filling in the checklist, have a look at the guidance from GOV.UK.
What happens if an employee doesn’t have the correct information for the Starter Checklist?
If an employee does not provide a P45 form from their previous employer and isn’t able to give the information needed for you to accurately fill out the starter checklist, then they may be put on the wrong tax code. This could result in them paying emergency tax.
This can be stressful for a new employee, as they might not receive their full expected salary initially. It also creates extra work for the HR department, who will need to recalculate the tax owed and issue a refund once the correct information is obtained.
Therefore, it’s important to have this information clarified and the right tax code identified when they start their employment with you.
Manage your payroll with PeopleHR
Now we have covered common questions like ‘What’s a P46 and how does it differ from a P45’, as well as how to fill in the relevant forms correctly, you should feel confident in your processes.
Keeping on top of important employee information can be easily manageable with the help of a flexible payroll solution. Data visibility and easily accessible information will ensure that your payroll processes are up to date and accurate.
If you’d like to discuss your options around payroll further, don’t hesitate to contact us today.
