Guidance for employers on the New Starter Checklist (previously P46 form)

28 August 2017

In this article, Simon Parsons offers updated advice for employers on how to ensure that the New Starter Checklist (formerly P46 form) is submitted correctly.

Taking on a new employee

Many employers are continuing to fail to collect correct information for new starter employees and failing to understand their employer responsibilities. Equally many are failing to apply the correct tax code using what is sometimes referred to as local practices.

Home Office regulations require employers to satisfy themselves that their employees are entitled to work in the UK and record pertinent documents showing that entitlement (termed as a defence or excuse). Equally, new employees in most cases should present their new employer with a P45 form.

The P45

The P45 is a certificate providing details of an individual’s former employment. It normally has three parts and the employee would give their new employer Parts 2 and 3. The employee will also have been given a Part 1A which they are to retain, so if the P45 has part 1A still attached, this must be returned to the employee.

The validity of the P45 and how it is to be applied is explained in HMRC guidance and in most cases the form determines the employee’s tax code. However, many employees may not have a P45 from their previous employer when they start working in a new job and often in the past, they and the new employer have never completed a New Starter Checklist either.

The New Starter Checklist – Same game as P46, new rules

The old form P46 (retired in April 2013) has now been replaced by a New Starter Checklist.

Employers’ HR and Payroll departments are obliged in most cases to undertake certain actions, or else fear potential penalties and fines for non-compliance from HMRC. If a new employee does not have a P45, then in most cases a New Starter Checklist must be completed by the employee. If a valid P45 is presented, then the employer must additionally complete the New Starter Checklist as well.

Employers are allowed to use their own version of the New Starter Checklist. This information could even be collected from employees electronically.

What if…

Often, employers have neglected the completion of the form leaving the onus on the employee to obtain and submit. This is no longer permitted and the employer has responsibility for obtaining the Starter Checklist information from their new employees.

With the operation of PAYE in Real Time and the onset of associated penalties and fines, it is essential that employers review their HR and Payroll processes to ensure that they are fulfilling their legal requirements and ensuring that the employee either presents their P45 or completes the Starter Checklist.

If the employee refuses to do either, then the employer is obliged to make the declaration on the employee’s behalf to the best of the employer’s knowledge. This will generally mean ticking box C.

Exceptionally, if your employee has not completed the New Starter Checklist (which replaces form P46), or provided you with the information to fully complete Section one in time for the first pay day, you (the employer) must complete Section one to the best of your knowledge on their behalf and use tax code OT on a non-cumulative basis.

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