By Paul Chappell

3rd March 2025

Making a payment to an employee after a P45 is issued

The need to make a payment to an employee after you have already issued their P45 is more common than you may think. Perhaps you’ve discovered they’re owed additional overtime, or maybe there’s been a delay in processing their bonus. Whatever the reason, here is how to handle it

Using a 0T Tax Code

When you make a payment after issuing a P45, you’ll need to use the 0T tax code on a week 1/month 1 basis, depending on how they were previously paid. This means tax will be deducted at the basic, higher, and additional rates without any tax-free personal allowance. It might seem a bit harsh, but don’t worry – your former employee can reclaim any overpaid tax through their Self-assessment tax return or by contacting HMRC directly.

Reporting These Payments

You’ll need to record these post-P45 payments through your normal payroll system, but they require special handling in the following way;

The payroll report to HMRC must be shown as an “after leaving” payment in your payroll software
Issue a letter to the former employee explaining the payment and the tax and National Insurance deducted
Keep clear records of when and why the payment was made

National Insurance Contributions

You’ll still need to deduct National Insurance contributions from post-P45 payments if they fall within the relevant earnings period. The rates and thresholds remain the same as for regular payments.

Timing Considerations

Try to process any additional payments as quickly as possible after discovering they’re needed. The longer you wait, the more complicated it can become for your former employee and payroll administration.

Finally, it is imperative that a revised or amended P45 MUST NOT be given to the former employee. If they query why a further P45 has not been issued, advise that the written statement is a requirement of HMRC and full details of the gross amount and deductions have been sent to HMRC. A further P45 will only mess up their tax records.

Need extra help? speak to the team at Ascend Payroll or reach out for a no-obligation quotation

Frequently asked questions related to this blog

Can you still pay someone after you have issued their P45?

Yes. It happens more often than you might think, for example if overtime was missed or a bonus is paid late. You process the payment through payroll, but you must handle tax coding and HMRC reporting correctly.

Which tax code should you use for a post-P45 payment?

Use tax code 0T on a week 1 or month 1 basis, matching how the employee was previously paid. Tax is deducted at the basic, higher, and additional rates with no personal allowance. It can look harsh, but the former employee can reclaim any overpaid tax through Self Assessment or by contacting HMRC.

How should you report and document the payment?

Record it in your normal payroll system and mark it as an “after leaving” payment in your payroll software so HMRC receives it correctly. Send the former employee a letter explaining the payment and the tax and National Insurance deducted. Keep clear records of when and why the payment was made.

Do you still deduct National Insurance?

Yes, if the payment falls within the relevant earnings period. The rates and thresholds are the same as for regular payments.

Should you issue a revised or amended P45?

No. A further P45 will mess up their tax records. If they ask why they have not received another one, explain that HMRC requires a written statement instead, and that the gross amount and deductions have already been reported to HMRC. Process any extra payments as quickly as you can once you know they are due, as delays make things harder for both the former employee and payroll admin.

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