A P45 is a summary of an employee's salary and the tax paid over the past financial year in the United Kingdom. It is issued when an employee leaves a job. A P46 is filed by a new employer in cases where an employee does not have a P45.
An employee should submit the P45, which includes four parts, to a new employer soon after being hired, to avoid being placed in the wrong tax code. An employee who wants to keep his past income confidential can alternatively send parts 2 and 3 of form P45 to a local tax office to inform them about the new job.
A P46 is used by a first-time employee or an employee who has taken a second job while still employed. An employer must complete section 1 of form P46 before an employee's first payday. It is not necessary for an employer to fill a P46 form if an employee is employed for less than a week.
Employers who do not fill and submit form P46 on behalf of new employees may be liable for penalties and fines associated with compulsory annual filing. The U.K. Home Office requires an employer to confirm that each employee has the legal right to work in the United Kingdom.