💷 All the rates & thresholds you need to know for 25/26...right here
💡Stay in the loop on smarter ways to handle people and payroll 💡| Learn more
💷 All the rates & thresholds you need to know for 25/26...right here
💡Stay in the loop on smarter ways to handle people and payroll 💡| Learn more
Even after an employee has left the business, they may be due additional payments. In the world of payroll, this is known as payment after leaving, and can be related to a number of things such as holiday pay, bonuses, commissions, or any other type of pay.Â
This should happen once their P45 is issued, and as per HMRC's guidance should be applied after they’ve left.
In the month that an employee’s contract is terminated, they’ll receive a P45. You should make the payment within one month of the employee leaving, after their termination date.
The tax code for a payment after leaving is the ‘0T’ on an M1 basis. A payslip is produced for the employee, and the payment after leaving should be reported to HMRC on the FPS. There’s no need to reissue the P45.
A P45 is an end of employment form which sums up how much an employee has earned and what tax they’ve paid up to that point in the year. As explained before, it’s given to a staff member at the end of their employment.Â
It’s one of the essential PAYE forms you’ll issue as an employer if you have staff in the UK (though P11Ds are now being phased out in 2026).Â
A P60, on the other hand, summarises what an employee has paid for the whole of a tax year. You’re obligated to ensure your employees get this form at the end of each tax year.
Monthly payroll checklist
If you’re using a payroll software, then you should set the employee to 'payment after leaving' during the termination process with an end date at the end of their SMP pay period. This should keep the employee on payroll until the last month of their SMP, and the SMP payments due will automatically apply to their payslip.
The P45Â is issued in the month that the employee leaves. Using HMRC's guidance, any payments processed after this, are taxed without freepay (0T M1) and no further P45Â can be issued.
Employees with a payment after leaving status won't be paid a salary, so any subsequent payslips issued will show only a £0 value until you add any additional payments, like so:
Processing payments after leaving is just one more of those tedious payroll or HR tasks you’d probably rather not have to contend with. The great news is that PayFit makes processing payments after leaving extra easy. Simply enable the ‘payment after leaving’ setting one month after your employee’s termination date in their employee record. Then, watch PayFit take care of the rest, including taxing this payment correctly. You can even enter a payment after leaving for a date further away in the future. Now that’s smart payroll.Â
We break down what the UK PAYE system is and all of your obligations as an employer when it comes to reporting and paying your deductions.
This guide provides a clear explanation of pre-tax deductions in the UK, how they work, and what they offer for both employers and employees.
Master payroll number requirements for 2025Â with our guide. Learn about RTI updates, HMRC compliance, and best practices for UK employers.
Learn everything about P11D forms, including deadlines, penalties, and upcoming changes to benefit reporting. Essential guide for UK employers.
The HMRC new starter form (checklist) is a form new employees without a P45 need to fill out. Here’s an overview for small businesses.
Looking for a better way to manage all those year-end payroll tasks? Find out exactly how PayFit helps with end-of-tax-year submissions.