P45 set to continue

06/February/2012

HM Revenue & Customs (HMRC) has given the P45 a reprieve following a consultation with employers over the authority's move to Real Time Information (RTI).

The tax authority had been proposing to replace the form with a "leaver statement" but has now dropped the plan.

Employers and representative groups said they did not want to see it go.

Employees are given a P45 when they move to a new employer or lose a job. It is a legal requirement for a P45, which records pay and tax deducted in the year so far, to be issued.

HMRC is to move to the RTI system, under which employers will tell the authority about tax, National Insurance contributions and other deductions when or before the payments are made, instead of at the end of the tax year.

It had been thought that the move to RTI would have made the P45 redundant but HMRC said it would be kept.

"Employers told us to keep the P45, which is exactly what we have done," said Stephen Banyard, acting head of personal tax at HMRC.

"RTI is on track and we want to work in partnership with employers and other stakeholders to make its introduction as smooth as possible."