Process extra pay for a leaver after issuing their P45
Description
You can pay extra payments to an employee after you mark them as a leaver and issue their P45.
Cause
Resolution
If you've issued the employee a P45, youmustn't reissue it after processing the extra pay. Issue them a letter or payslip that includes the date of the payment, the gross amount of pay and any tax deducted.
Follow each section below to ensure you process the extra payment correctly.
Pension contributions
If your employee's record has an active pension scheme assigned, check with your pension provider whether you deduct contributions from the extra payment.
Click the Pensions tab, then click the Manage Schemes button.
Select the relevant pension scheme and click Edit.
Set the Left Scheme date to when their leave date.
Click OK, then Close.
Click Save, then Close.
Payment types
The process for making the extra payment to the employee depends on if it's a regular or irregular payment. A regular payment is, for example, the employee's final salary or wage, including week in hand.
HMRC defines an irregular payment as follows:
Accrued holiday pay
Bonus
Arrears of pay following a backdated pay award
If you're not certain which type of payment you need to process, contact HMRC for advice.
Process the payment
Click the relevant option below to see the steps to process each type of payment. If you need to pay a mixture of regular and irregular payments, contact HMRC to confirm which steps to process with.
When you follow the steps for either payment type below, your software automatically includes the 'Payment after leaving' flag that HMRC requires in the FPS. This occurs when the period you process and submit is after their leave date.
Enter 0T (Zero T) and select the W1 / M1 check box.
Click Save, then click Close.
Set the process date to the date of the payment.
Process the employee's extra payment.
Click the Select this check box if your employee is leaving and this is their final payment check box.
Check the employee's payslip is correct.
Update records for this employee.
Double-click the relevant employee.
Click the Employment tab.
Re-enter the leave date you removed in Step 3.
Click Yes.
Send a letter, or payslip, to the employee.
If you've already printed the P32 for this period, print it again and adjust the next payment to HMRC to account for any difference.
Now submit an FPS for the employee on or before the date they receive the extra payment. NOTE:If you've reprocessed a payment that you'd already submitted on an FPS, submit a full payment submission adjustment rather than an FPS.
We recommend you reprint P11s for the employee, so that you have a complete record of their pay. Don't reissue the employee's P45.
Enter 0T (Zero T) and select the W1 / M1 check box.
Manual NI Entry
If the employee's pay frequency isn't weekly, select this check box.
You must then manually calculate the NI due on the earnings using the weekly thresholds and enter this value in Enter Payments. For information about calculating NI, refer to HMRC's CA38 National Insurance contributions.
To enter the employee's NI manually, click the Summary tab within Enter Payments then double-click the National Insurance Current column. To enter the employer's NI, click the Employer's button within Enter Payments.
Click Save, then click Close.
Set the process date to the date of the payment.
Process the employee's extra payment, remembering to enter the manual NI value if applicable.
Click the Select this check box if your employee is leaving and this is their final payment check box.
Update records for this employee.
Double-click the relevant employee, then click the Employment tab.
Re-enter the leave date you removed in Step 3 and click Yes.
Send a letter, or payslip, to the employee including details of the date of payment, gross amount and tax.
If you've already printed the P32 for this period, print it again and adjust the next payment to HMRC to account for any difference.
Now submit an FPS for the employee on or before the date they receive the extra payment. NOTE:If you've reprocessed a payment that you'd already submitted on an FPS, submit a full payment submission adjustment rather than an FPS.
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