UK To Retain End Of Employment Form

by Robert Lee, Tax-News.com, London

10 February 2012

The UK tax authority's end of employment form will remain in continued use, after plans to replace it were scrapped.

HM Revenue and Customs (HMRC) had intended to introduce a leaver statement in place of the existing P45 form, but has withdrawn proposals following a consultation on the proposed Real Time Information (RTI) system.

The P45 is issued by an employer when an employee ceases to work for them, and provides a record of the employee's pay and tax deducted up to that stage in the tax year. The consultation period ended in January and engaged employers and representative groups. HMRC will now retain the P45 for all employees.

RTI is being introduced to improve the operation of pay-as-you-earn (PAYE). HMRC says the new regime will make the PAYE system easier for employers and HMRC to operate, and once it is bedded in, will mean more employers pay the right amount in-year. It is also intended to help support the government's introduction of the Universal Credit benefit system.

Under RTI, employers and pension providers will tell HMRC about tax, national insurance contributions (NICs) and other deductions when or before the payments are made, instead of waiting until after the end of the tax year.

The RTI programme is on track to start a 12 month pilot from April, 2012, with 300 volunteer employers. Once the new system is in place, P45s will be given to the employee to take to their next employer, and should not be sent to HMRC. Starter and leaver information will be reported by employers as part of their normal RTI submissions.

Stephen Banyard, Acting Director General for Personal Tax at HMRC, said: “We have been working closely with employers and stakeholders about the introduction of RTI. Employers told us to keep the P45 – which is exactly what we have done. RTI is on track and we want to work in partnership with employers and other stakeholders to make its introduction as smooth as possible.”

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