If you’ve applied for a new job or you’re about to start with a new employer then you will have to provide some information about your tax status. This will help your new employer to ensure that you’re on the right tax code and that you’re paying the right amount of tax.
But, what if you don’t want your new employer to know what your previous salary was? Perhaps you want to keep that information confidential? Or, maybe you entered into long and protracted negotiations about your new salary and you don’t want your employers to know that you’re on a much higher wage?
If you want to avoid your new employer seeing your earnings, one possible way is to not give the employer your P45 and to use a ‘Starter Checklist’ instead. Keep reading to find out more.
What your P45 says
When you stop working for an employer you will receive a P45 tax form. Whether you leave voluntarily, you are made redundant or you are fired you will receive a P45 and this form contains various pieces of information including your PAYE reference code.
Crucially, your P45 also shows how much you earned and paid in tax during the tax year.
Your P45 will be in 3 parts. When you join a new employer you should ordinarily give parts 2 and 3 to the new company. This allows them to see how much tax you have paid and to put you on the correct tax code.
If you do not want show your employer your P45 because you want to keep your previous wage confidential then you can get around giving them your P45. Instead, you should send parts 2 and 3 to your tax office along with details of your new employer. If you do this straight away it will help you to ensure that you are put on the correct tax code.
If you don’t provide your new employer with a P45 then they will have to put you on an emergency tax code until they obtain the correct details from HMRC. If you have told the tax office your details then this should be sorted out quickly. If not, you could overpay tax until the end of the tax year and then you may have to claim a tax refund.
Use a ‘Starter Checklist’ instead
In the past, if you did not provide a P45 form to your new employer then you would have had to complete a P46 form.
Now, the P46 form has been replaced by the ‘Starter Checklist’. If you don’t provide your P45 to your employer as you don’t want them to know your previous salary your new employer may give you a ‘Starter Checklist’ to complete. This contains important information that affects the amount of tax you’ll pay, including:
• Whether this is your first job
• If you’ve been claiming Jobseeker’s Allowance or Employment and Support Allowance
• If you have another job
• If you are paying off a student loan
The Starter Checklist will help your employer to allocate a tax code and work out the tax due on your first pay day. It is therefore beneficial if you can complete the Starter Checklist or provide the relevant information your employer has asked you for as soon as possible before your first pay day. If you do, your employer will know what tax code to use and it is more likely that you’ll pay the right amount of tax from day one.