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Is there a P45 for the self-employed?

  • 3 min read
  • Last updated 2 Jun 2023

If you’ve just started working for yourself, you may be wondering if there’s a P45 for the self-employed. Find out the answer below!

First of all, what’s a P45?

A P45 is an official document that your employer gives you when you stop working for them. This document includes details of your tax code, gross pay, and how much tax you’ve paid for that year.

When you start working a new job, your new employer will most likely ask for your most recent P45.

Whether you’ve left on a high note or never want to see your boss ever again, your employer has to give you a P45. If the latter is true, then they can always post it to you.

So, is there a P45 for the self-employed?

So, now you know there’s a P45 for employed folks, but what about the self-employed? 

Well, the short answer is no – there isn’t. 

This is because employees are taxed automatically through PAYE – a system set up by HMRC to collect tax from employees. Self-employed people aren’t taxed through this system. Instead, if you’re self-employed, you’ll have to sort your own taxes, so you won’t get a P45.

Self-employed vs PAYE

Whilst a self-employed person is responsible for sorting their taxes through an annual Self Assessment tax return, an employed person will have tax deducted from their wages by their employer. Their employer will then send this to HMRC on the employee’s behalf.

What if you’re both self-employed and PAYE?

This is also possible! If you work a 9-5 during the week but at the weekend, you’re a self-employed hairdresser, this makes you PAYE and self-employed (and pretty versatile, too!).

In this case, your 9-5 wages are taxed automatically through PAYE, but you’ll have to pay tax on your hairdressing earnings through Self Assessment.

So, if you leave your 9-5, you’ll receive a P45 from your employer. But if you decide to stop hairdressing at the weekend, you won’t receive a P45. You’ll just have to let HMRC you’re no longer self-employed so they don’t expect a tax return the following year.

🚨 Bear in mind, if you earn less than £1,000 a year from self-employment, you won’t have to pay tax on this or report it to HMRC. This is your trading allowance. 🚨

Switching from self-employment to employment?

If you’ve given up self-employment to take on the corporate world, chances are you won’t have a P45. So how will your new employer set you up on their payroll? 

In this case, your new employer will ask you to fill out a starter checklist (P46 form). This will also be the case if you (like all of us at some point) have lost your P45.

A P46 form requests information about any second jobs, student loans, benefits, and more. This will ensure your new employer has the correct information so you’re paying the right amount of tax. They’ll then pass the information on your starter checklist to HMRC who’ll revise your tax code.

I’ve stopped claiming benefits to start work, do I need a P45?

If you’ve stopped claiming jobseeker’s allowance/universal credit to start work for a new employer, you’ll get a P45 from the Department for Work and Pensions (DWP). 

You should give this to your new employer.

Need a 👋 sorting your tax return?

We can help! It doesn’t matter whether you’re newly self-employed or ditching self-employment for the corporate world and need to sort your last Self Assessment! 

Find out more about our tax return service here.

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