Managing Payroll Corrections for Leavers

How you correct the records depends on whether a P45 has been generated, whether the leaving date was already transmitted via a Full Payment Submission (FPS), and when in the tax year the correction occurs.

Handling Common Leaver Scenarios

1. Leaving Date Submitted in Error

If a leaving date was submitted to HMRC on an FPS by mistake, you can remove or correct the date in your payroll software before filing the subsequent pay period.

• If P45 has not been issued: Remove the leaving date in your software settings. The updated active status will transmit on your next FPS.
• If P45 has already been issued: Do not delete the record. Set up a new employment profile for the employee with a new Payroll ID if they are continuing employment, to prevent HMRC record duplication.

2. Leaving Date Omitted from Previous Submission

If an employee left in a prior pay period but their leaving date was omitted from that period's FPS:

• Add the correct leaving date to the employee's personal profile..
• The leaving date will automatically transmit to HMRC on your next scheduled FPS submission.
• Issue the generated P45 Parts 1, 1A, 2, and 3 to the departed employee once the submission completes.

3. Adjusting Pay or Deductions After Departure

When pay, tax, national insurance, or pension figures need adjusting for a former employee whose leaving date has already been filed with HMRC:

• Overpayments / Underpayments in the Current Tax Year: Process an adjusting FPS submission (or an additional payment run using the original Payroll ID and setting the tax basis to Week 1/Month 1 where required by HMRC).
• Updated Year-to-Date (YTD) Totals: The amended YTD figures will be transmitted on the next FPS filing to update HMRC's records. Issue an updated written statement or revised P45 if taxable figures change significantly.

Best Practice Checklist for Leaver Audits

• Backup Original Records:
  Always download and archive original payslips and generated P45 documents prior to adjusting historical pay figures.
• Reconcile YTD Balances:
  When editing historical pay periods, ensure subsequent YTD totals recalculate correctly before transmitting the next FPS.
• P45 Generation:
  Ensure P45 forms are provided directly to the departing employee; never issue a revised P45 without clearly marking it as an updated statement if requested by HMRC or the employee.