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HMRC will not replace the P45

HMRC has announced that plans to replace the P45 with a leaver statement have been withdrawn after a recent consultation about Real Time Information (RTI).

Propositions had been made to give employers participating in the RTI programme the option of providing departing employees with a leaver statement instead of a P45.

However, following the consultation and a workshop with employers and representative groups, HMRC will retain the P45 for all employees.

Chairman of the CIOT’s Employment Taxes Sub-Committee, Colin Ben-Nathan said that the removal of the requirement to provide a P45 was "well-intentioned, but doing so this year would have been premature and potentially confusing for employers, employees and even government itself".

He added: “New employers would have had to grapple with a mix of freeform leaver statements and P45 forms; plus no procedure seemed to have been put in place for ensuring the employee in the middle of all this retained the document for his own use.

"P45s are widely recognised and widely used, not just by new employers, but by banks, tax advisers and public bodies, as evidence of identity.

"Introducing an alternative document alongside the P45 without an adequate educational process and amendment of rules and training manuals would be confusing and likely to increase bureaucratic burdens, the opposite of the government's intentions.

"We are pleased that HMRC consulted on this issue, listened to concerns and have come to a pragmatic solution that is all the better for having consulted. Once RTI is up and running this issue could be revisited."