Paying an employee after giving them a P45

Question asked by Kevin Doran 8 years ago

From HMRC:

If you have to pay an employee after they leave (including someone you’re giving a taxable redundancy payment over £30,000):

  • use tax code 0T on a ‘week 1’ or ‘month 1’ basis
  • deduct National Insurance (unless it’s a redundancy payment) and any student loan repayments as normal - but if it’s an ‘irregular’ payment like accrued holiday pay or an unexpected bonus, treat it as a weekly payment
  • report the payment and deductions in your next FPS, using the employee’s original ‘Date of leaving’ and payroll ID, and set the ‘Payment after leaving’ indicator
  • give the employee written confirmation of the payment showing the gross amount and deductions
  • add the additional payment in the ‘Year to date’ field if the payment is in the same tax year

Does CB have a 'Payment after leaving' indicator?

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5 Replies

Nope, I re-added them as an employee, processed the extra pay [possibly setting a w1/m1 indicator], then re-P45'd them.

It was only by chance I noticed the above guidance this morning via an Aweb thread.

I've done it a few times, the sums involved have been fairly trivial so i'm not too concerned with the fact it's technically incorrect. It would certainly be nice to have something proper in place going forward though.

We also use Moneysoft and, as good as they are, i'm not even sure how they handle this one. I might drop them an email...

Best answer
8 years ago

Hi Kevin,

We don't have a feature for this at the moment - I have escalated to the payroll technical guys to find out what the best workaround for this is at the moment, as setting a leaving date prevents you from processing any payroll for the employee beyond that date. I will get back to you as soon as I have further information.

8 years ago

Cheers John. I know what i've done in the past as a workaround but it's not necessarily correct.

8 years ago

Did you undo and re-calculate the last period, including the payment after p45 and then re-submit that?

8 years ago

Nope, I re-added them as an employee, processed the extra pay [possibly setting a w1/m1 indicator], then re-P45'd them.

It was only by chance I noticed the above guidance this morning via an Aweb thread.

I've done it a few times, the sums involved have been fairly trivial so i'm not too concerned with the fact it's technically incorrect. It would certainly be nice to have something proper in place going forward though.

We also use Moneysoft and, as good as they are, i'm not even sure how they handle this one. I might drop them an email...

Best answer
8 years ago

Moneysoft replied...

In their software, once you enter a leaving date the employee is still on the employee list [for that year] but it greys out the area where you'd normally type the figures in:

file

I always presumed that meant you couldn't type into the greyed out area. However it seems you can and in doing so it then automatically changes the tax code to 0T w1/m1:

file

It also gives a warning message to say it's an ex-employee.

Finally, the RTI submission then automatically includes the 'Payment after leaving' indicator in the FPS.

8 years ago

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