Is There a P45 for Self-Employed?

If you’re self-employed in the UK, you might come across a common query “Is there a P45 for self-employed workers? The answer depends on your employment status and circumstances.

If you are self-employed and moving to employment, or you’re simply trying to understand the complexities of the UK tax system and self-employment, this guide will explain your situation precisely. 

What is a P45, why do you need it, and what do you do in the case you don’t have one? Let’s take a look to find the answer to these questions.

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What Is a P45, Anyway?

Let’s start with the P45 meaning. This is a document that your employer gives you when you leave the job. This document contains the details of how much you’ve earned until that point in time in the financial year and the amount of tax you’ve paid on the earnings. Take it as a handover note of the tax. You give this P45 to your new employer. This enables your new employer to calculate your tax code, ensuring you don’t pay excessive tax or pay less tax from the starting day.

Employers are required to give you a P45 document whenever you resign from a job or are let go. This is a part of the PAYE system, a tax scheme. A P45 is divided into four parts: one is for you, one is for HMRC, one is for your new employer, and the last is for your previous employer. Right? However, things are different for those who are not in traditional employment.

For employees, this is the responsibility of the employers to manage the Pay As You Earn (PAYE) system and hand over P45 forms when employees leave. What about the self-employed, though? 

Frequently, a P45 is confused with a P60. A P60 is provided at the end of the tax year, and it contains a record of total earnings and a tax summary. For self-assessment filing, you would need that document. By contrast, P45 is used purely for a change of employment during the tax year.

Do You Get a P45 When You Are Self-Employed?

Let’s get straight to the point. Is there a P45 for self-employed people? The answer is no. If you are self-employed, you don’t work for anyone; you work for yourself. Consequently, when you stop trading or when you change how you work, no one will give you a P45. You also do self-assessment instead of PAYE for tax obligations. 

Here’s how it works. While working under the PAYE system, tax and National Insurance are deducted, and the employer pays you the net income while reporting it to the HMRC. In contrast, the self-employed people calculate their profits and tax obligations on their income after claiming all allowable expenses. Tax returns have to be filed by January 31 each year, and no P45 is necessary because you are not “leaving a job.”

What About Freelancers? Do Freelancers Have a P45?

Freelancers are self-employed in the eyes of HMRC. So the answer is a “no”. If you invoice clients and do your own taxes, you’re in the same boat. But if you freelance through your own limited company and get a salary from yourself, then things get a bit different. In that case, your company is the employer and could issue a P45 if you stop drawing a salary. But for sole traders or basic freelancers, it’s not for you.

What for PAYE and Also Self-Employed?

If you’re paid through PAYE but also earn income as self-employed or a freelancer, you will notify HMRC about your additional income. 

The main job tax is paid through PAYE, but freelance income does not fall under it. Thus, it will be necessary to register as a Self Assessment taxpayer and submit a tax return annually. The positive thing is, you can claim many expenses, such as software, travelling, or equipment, to reduce your tax bill. 

You may not be required to record your side hustle earnings of less than £1,000 in a tax year.

Going from Self-Employed to Employed – P45 and What You Need

Now, let’s talk about going from self-employed to an employed situation. You’ve built your business, but now you’re doing a steady job. But what about that P45? Since you didn’t have an employer before, you won’t have one to give. 

Your new employer will ask for it, but don’t worry if you say “I don’t have one”. They’ll give you a Starter Checklist instead. This form replaced the old P46 and helps them work out your tax code. You fill in details like your name, address, and whether this is your first job since leaving school or university. It also asks if you’ve had other jobs or pensions in that year.

Why does this matter? Without a P45, HMRC might put you on an emergency tax code. That means you could pay more tax upfront, but you’ll get a refund later if you’ve overpaid. To avoid that, make sure your Starter Checklist is accurate.

If you were self-employed, you also need to tell HMRC you’re not continuing. Deregister as self-employed through your online account or by calling them. File a final Self Assessment to manage any outstanding tax. If you had a limited company, close it properly, which might involve issuing yourself a P45 from the company.

Keep records of your self-employed income. Your new employer might not need them, but HMRC could ask to verify your tax history. I once helped a friend who switched from freelancing to a corporate role. He used his last tax return to show his earnings, and it worked.

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What to Do If You Have No P45?

So, what to do if you have no P45? It is simple to do it, whether you are leaving, self-employed, or have lost it. Inform your new boss. They will provide you with the Starter Checklist. Complete it truthfully, and forward it to HMRC.

If You Are Starting A New Job

• Fill out a Starter Checklist. As discussed above, your new employer is required to provide this form if you do not have a P45. The checklist asks for key information like your National Insurance number, previous employment or benefits, and student loan status.
• Provide accurate details. Answering the questions correctly on the Starter Checklist is important for your new employer to assign you the right tax code. Otherwise, you may end up on an emergency tax code and pay too much tax.
• Keep a copy. Although your new employer does not need to send the checklist to HM Revenue and Customs (HMRC), it is a good idea to keep a copy for your own records. 

If You Have Lost Your P45

• You cannot get a replacement. HMRC does not issue duplicate P45s if you have lost the original.
• Contact your previous employer. You can ask your former employer to provide a “statement of earnings” on company letterhead, which can serve as a replacement. Some may also be able to provide a copy if the original was issued electronically.
• Access your online tax account. The information from your P45 is available on your Personal Tax Account on the GOV.UK website. 

If Your Previous Employer Will Not Provide A P45

Your former employer is legally required to provide you with a P45 when you leave. If they have failed to do so, you should: 

• Remind them of their obligation. Inform the payroll or human resources department that they must provide the document.
• Contact HMRC. If they still refuse, you can contact HMRC directly for assistance, as employers can be fined for not issuing P45s. 

Plenty of Paperwork Even After no Requirement of p45?

If an employee does not receive a P45, they may still have to complete a lot of paperwork when they leave their job. Here are some of the most important things to do:

• Make sure any holiday entitlement has been paid:

If you have accrued holiday entitlement but have not taken it, this will need to be paid to you by your employer.

• Apply for any benefits you are entitled to:

If you are entitled to any benefits, such as Income Support or Jobseeker’s Allowance, you will need to apply for these benefits.

• Close down any pension schemes or savings plans you have with your employer:

If you have a pension scheme or savings scheme with your employer, you will need to contact the scheme provider. To close them down and get any money that you have saved.

• Transfer any pension schemes you have to a new pension scheme or another provider:

If you have a pension scheme, you will need to contact the scheme provider to see if you can transfer it to a new pension scheme, or if you can take it in cash.

• Transfer any equity schemes you have to a new provider:

If you have any equity schemes, such as share options, you will need to contact the provider to see if you can transfer it to a new provider. Take it in cash, or sell it.

• Update your tax records with HMRC:

If you have been employed, you will need to update your tax records with HMRC. To ensure that your tax and National Insurance contributions are up to date.

What if you are switching from Self-Employment to Employment?

If you are switching from being self-employed to employment, there are several important considerations to bear in mind:

1. Tax Implications:

As a self-employed person, you will need to submit a self-assessment tax return to HMRC. Each year declare your income and any tax liabilities.

2. Employment Status:

It is important to ensure that you are properly classified as a fully employed person. But also for things like entitlement to benefits and employment rights.

3. Pension Schemes:

If you have a pension scheme as a self-employed person, you will need to decide what to do with it. You may be able to continue it, transfer it to your new employer’s scheme, or take it in cash.

4. Payroll Tax:

Provide your new employer with your tax code and National Insurance number.

5. Work Rights:

As an employed person, you will now have the right to sick leave, holiday entitlement, maternity/paternity leave, and other employment rights. It is important to ensure that you are properly informed about these rights and to make sure that your employer is aware of them too.

While it can be a complex process to switch from self-employment to employment, with appropriate guidance and support, you will do it successfully.

The Bottomline

At the end of the day, a P45 is only for employees. And not for the self-employed or freelancers.
If you work for yourself, your Self Assessment acts as your main tax record, showing what you earned and what you paid.

Switching from self-employed to employed? Your new company will sort things out with a Starter Checklist.

For freelancers, contractors, sole traders, the paperwork may differ but the goal’s the same: staying on top of your taxes without confusion.

Once you understand which form fits your situation, managing your tax life in the UK gets a lot simpler.

 

Disclaimer: The information provided on AccountingFirms.co.uk is for informational purposes only and should not be considered as financial advice. Always consult with a professional accountant to ensure compliance with UK laws and regulations.