UK , but essentially you:. It contains examples of the screens you will see in BPT and simple to follow instructions. If you need to make a taxable payment which would not include statutory redundancy pay to an employee who has already received their P45, then the HMRC guidance on what to do is in the booklet RT7 — Guidance for employers exempt from filing Real Time Information online.
Various pay elements may be due to your employee when they leave, for example notice pay, accrued holiday pay or statutory redundancy pay. Both the employee and employer are normally entitled to a minimum period of notice on termination of employment. This will be the amount stated in the contract or the statutory minimum notice period , whichever is longer. The notice period is the amount of time between the decision to terminate an employment contract and the date that the contract actually ends.
You can find more on notice and pay during the notice period on the ACAS website. If you do not wish your employee to work their notice period, you could give them a payment in lieu of notice.
This represents pay they would have received during the notice period. Any such payment will be treated as earnings for PAYE tax and NIC purposes, however exactly how you deal with this will depend on the timing of the payment - e.
You may not be obliged to give your employee a notice period or payment in lieu of notice if you summarily dismiss them in cases of gross misconduct , such as for theft or fraud.
When an employee leaves your employment - even if you have dismissed them without notice for gross misconduct — it is important to understand that they must receive pay for any annual leave they are entitled to in the current leave year but have not taken. Any such payment will be treated as earnings for PAYE tax and NIC purposes, however exactly how you deal with this will depend on the timing of the payment — e. Sometimes, when circumstances change, you may no longer need your employee.
If your needs change and either the type of work carried out by your employee is no longer needed or they are no longer required because you move premises for example, there may be a redundancy situation. Redundancy has a very specific definition in law. If it is a true redundancy you would not immediately recruit a direct replacement for the employee. Further information on redundancy can be found on GOV.
Employees with two years' or more continuous service are entitled to statutory redundancy pay and redundant employees have the right to reasonable paid time off to look for other work. As such, you can pay it outside of your normal payroll processes, although you should give the worker a letter explaining what it is, in case they need a record of the income for other reasons — e. Keep a copy of the letter for your own records.
If you believe you need to make your employee redundant you should seek advice from an expert. Skip to main content. Home Tax Guides Employee leaving. Employee leaving. Updated on 15 July Taking on an employee. What to do when an employee leaves your employment, including giving them a P What is a P45?
When an employee leaves your employment, you should issue them a Form P Before proceeding you must ensure that all payments have been made to the employee for work carried out. If an employee leaves your employment mid month, you will need to issue a P45 before month end. This utility is only available if you have registered to use ROS.
Each employee's P45 must be issued before proceeding. To prepare the ROS P45 file:. You can now submit this file to ROS. Home Money and tax Income Tax.
P45, P60 and P11D forms: workers' guide. By law your employer must give you a P45 - ask them for one. Print entire guide. Related content Income Tax Keeping your pay and tax records. Brexit Check what you need to do. I should add that employees are normally issued with their P45 when they receive their last payment of week-in-hand wages, in this case next Friday.
An employer is supposed to issue an employee with their form P45 at their date of termination or, if this is not practicable, without unreasonable delay. It will obviously be helpful if he can have a form P45 to give to his new employer the first day he starts his new job.
However, this does mean that the payment you make next Friday, because it is made after form P45 has been issued, must be taxed using a BR tax code ie at basic rate tax.
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