Cessation of Employment / Death of an Employee

  1. Form P45 (cessation certificate)
  2. Calculation of tax at date of leaving or at date of death
  3. Completing form P45
  4. Payments made after date of cessation and before following 1 January
  5. Payments made after 31 December where the employee left before that date
  6. Death of an employee: arrears payments to personal representatives
  7. Employee retiring on a pension paid by the employer
  8. Employee retiring on a pension paid by the employer and dealt with under a separate registration number or paid by a separate body (trust fund, life assurance company etc.)
  9. Employee transferred from one branch to another
  10. Married (non-assessable spouse) employee becoming a widow(er)

1. Form P45 (cessation certificate)

When an employee leaves the employment, is granted a career break or dies while in the employment, the employer should complete form P45.

When a ceased employee receives an additional payment, which was not included on the original form P45, the employer should complete form P45 Supplement.

Employers can complete a paper form P45 or file forms P45 through Revenue On-Line Service (ROS) - see Revenue on-line service parts 1 - 9. Paper forms P45 and P45 Supplement can be obtained from:

Revenue's Forms & Leaflets Service
Telephone (24-hour service)1890 30 67 06
If calling from outside the Republic of Ireland please phone + 353 1 7023050
e-mail: custform@revenue.ie

Revenue issues a P45 Helpsheet to employers with all supplies of P45's. The Helpsheet provides detailed information regarding how to complete the P45.

Care should be taken that the employee's name and Personal Public Service number are entered on the form correctly. Any omissions or inaccuracies will cause delay and inconvenience to the employee and to subsequent employers.

Four-part form (form P45)

(See sample P45 in Sample Forms)

The form P45 is a four-part carbonised form certifying the employee's pay, tax and PRSI contributions within the tax year up to date of cessation. Care should be taken when completing it that entries made on part 1 are legible on all four parts.

P45 Part 1

Part 1 of the form P45 is a notification to Revenue that the employee has ceased employment and should be sent to Revenue immediately the employment ceases.

It is of the utmost importance that an employer issues the P45 immediately an employee ceases in the employment. The P45 part 1 sent to Revenue contains the details of the employee's pay, tax and PRSI contributions to date of cessation, and is held by Revenue on computer record along with pay, tax and PRSI details from any other previous employments the employee had in the tax year.

When the new employee commences in their new employment, all the pay and tax details from 1 January up to the date of the new employment are included on the cumulative tax credit certificate issued by Revenue to the new employer.

Where a previous employer delays in sending part 1 of the form P45 to Revenue, the employee's previous pay and tax record is incomplete and therefore it is not possible to issue a cumulative tax credit certificate. In these cases the tax credit certificate must be issued on the non-cumulative (week 1/month 1) basis until the P45 part 1 is received.

P45 Parts 2, 3 and 4

Parts 2, 3 and 4 (attached together) should be given to the employee on the date the employment ceases.

The employee requires parts 2, 3 and 4 to:

  • give to their new employer to avoid paying emergency tax
  • claim a refund of tax during unemployment
  • claim Social Welfare benefits

Parts 2 and 3 are in most cases given by an employee to a new employer who retains part 2 and sends part 3 to Revenue as a request for a tax credit certificate (New employees and employees recommencing part 5 ).

Part 4 is for use in claiming Jobseeker's Benefit (formerly known as Unemployment Benefit) from the Department of Social Protection.

An employer should not in any circumstances supply duplicates of parts 2, 3 or 4 to an employee who has left the employment. Where the original has been lost or mislaid a letter can be given to the employee stating all relevant pay, tax and PRSI information.

Deceased employee

In the case of a deceased employee parts 1 to 4 inclusive should be sent directly to the employee's local Revenue office.

Form P45 supplement

A form P45 Supplement is a notification to Revenue of payments made to a former employee since date of leaving which were not included on the original P45. Where such payments are made it is incorrect to complete another form P45.

(See sample P45 Supplement in Sample Forms)

Payments already included in the total pay and tax on the original form P45 should not be included on the P45 Supplement. The form should be completed and sent to Revenue immediately following any such payment being made to a former employee.

Employers can file forms P45 Supplement through Revenue On-Line Service (ROS). Paper versions of this form can be obtained from:

Revenue's Forms & Leaflets Service
Telephone (24-hour service) 1890 30 67 06
If calling from outside the Republic of Ireland please phone + 353 1 7023050
e-mail: custform@revenue.ie

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2. Calculation of tax at date of leaving or at date of death

Tax liability at date of leaving should be calculated by reference to the instructions in Employee pay day - calculating tax due parts 1 - 11 even if the payment made at that date relates to a period shorter than the employee's normal pay period, e.g. a monthly paid employee should, if a payment of salary is made in the month in which employment ceases, be given the full tax credits and standard rate cut-off point, if any, due for the month, even if the payment relates to part of the month only.

The same procedures apply if the employee is on emergency basis at date of leaving or death. For example, a fortnightly paid employee commences his first employment with a company in week 10 of the tax year and is taxed on the emergency basis. He has provided his PPS number. When he leaves the employment at the end of week 12 (his third week), he should be given the full tax credits and standard rate cut-off point due for the fortnight, even though the payment relates to part of the fortnight only (see Calculation of tax under the PAYE system part 8).

The employer should refund any overpayment of tax, which arises through the application of the foregoing instruction, in the usual way.

If the employer has calculated the amount of any balance of salary etc., which will be paid to the employee after leaving or to the employee's personal representatives where the employee has died, it should be included in the final calculation of tax and shown on form P45. If, however, such a balance has not been calculated at date of leaving it should be dealt with as in paragraphs 4 - 6 and part 1 of form P45 should be marked "further payment to be made".

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3. Completing form P45

The following instructions will be helpful in completing the form P45.

P45 entry - Date of Commencement

The date of commencement should only be completed where the present period of employment commenced since 1 January in the current tax year.

Where an employee has more than one period of employment with the same employer in the tax year the date of commencement for the latest period of employment must be completed.

P45 entry - Weekly/Monthly Tax Credits, Standard Rate Cut-Off Point

Employee on cumulative basis or week 1/month 1 basis at date of cessation

If the cumulative basis (Calculation of tax under the PAYE system parts 3 - 5 ) or week 1/month 1 basis (Employer's PAYE records part 8.2 , Calculation of tax under the PAYE system part 6) applies at date of leaving the following entries should be made:

Tax credits and standard rate cut-off point: Enter amount as shown on the employee's latest tax credit certificate

Employee paid weekly or monthly: Highlight "Weekly" in the case of an employee who was paid weekly, fortnightly, four-weekly or at irregular intervals. Highlight "Monthly" in the case of an employee who was paid monthly, twice monthly or at regular intervals of more than a month.

Week/Month Number:

Week Number: (If paid weekly, fortnightly, four-weekly or at irregular intervals) the number of the income tax week up to which tax credits and standard rate cut-off point have been set against pay.

Example:

An employee who was paid fortnightly leaves on 3 March (in week 9). Final payment is made on that day. The cumulative basis applies.

Under Employee pay day - calculating tax due part 3 the employee is entitled to the cumulative tax credits and standard rate cut-off point up to and including week 10 even though the final pay-day falls in week 9. The entry on form P45 should show week 10.

Month Number: (If paid monthly, twice monthly or at regular intervals of greater than a month) the number of the income tax month up to which tax credits and standard rate cut-off point have been set against pay.

Example:

An employee who was paid twice-monthly leaves on 1 May. Final payment is made on that day. The cumulative basis applies.

Under part 8.6 the employee is entitled to the cumulative tax credits and standard rate cut-off point up to and including month 4, plus half of the monthly tax credit and standard rate cut-off point figure for month 5. The entry on form P45 should show month 5.

Employee on temporary basis at date of cessation

If the Temporary basis (Calculation of tax under the PAYE system part 7) applies at date of leaving the entries to be made on the P45 are:

Tax credits and standard rate cut-off point: Enter amount as shown on the employee's P45

Week Number: (If paid weekly, fortnightly, four-weekly or at irregular intervals) the number of the income tax week up to which tax credits and standard rate cut-off point have been set against pay.

Month Number: (If paid monthly, twice monthly or at regular intervals of greater than a month) the number of the income tax month up to which tax credits and standard rate cut-off point have been set against pay.

Employee on emergency basis at date of cessation

If the emergency basis (Calculation of tax under the PAYE system parts 8 - 9) applies at date of leaving the entries to be made on the P45 are:

Tax credits and standard rate cut-off point: The total of any tax credits and standard rate cut-off point set against pay to date.

Week Number: (If paid weekly, fortnightly, four-weekly or at irregular intervals) the number of the income tax week in which final payment is made.

Month Number: (If paid monthly, twice monthly or at regular intervals of greater than a month) the number of the income tax month in which final payment is made.

P45 entry - (a) Total pay & tax deducted from 1 January last to date of cessation

Total Pay

Total pay means all pay from 1 January to date of cessation. Enter the cumulative amount of pay (if known) from the previous 1 January to date of cessation. This will include any amounts of previous pay and tax of which you have been notified by Revenue. The figure entered should be rounded down to the nearest €.

Total Tax Deducted

Enter the cumulative amount of tax deducted from the previous 1 January to date of cessation (if known).

P45 entry - (b) If employment started since 1 January last, enter Pay and Tax deducted (or Tax refunded) for this period of employment only

Pay (this employment)

This section should only be completed if this period of employment commenced since the previous 1 January. This employment means this latest period of employment - see following example. Enter the amount of pay in respect of this period of employment only. The Pay figure entered should be rounded down to the nearest €.

Tax Deducted or Tax Refunded

This section should only be completed if this period of employment commenced since the previous 1 January. Enter the amount of tax deducted or tax refunded to the employee in this period of employment. The tax figure should not include brackets or a minus sign.

Example:

An employee has worked for 2 periods of employment with the same employer in 2007.

Period 1: 1 January to 25 March

Period 2: 10 June to 15 September

On 15 September the employee leaves after the 2nd period of employment and the employer completes the P45 as follows:

  • Date of Commencement 10 June (in DDMMYY format)
  • Date of Cessation 15 September (in DDMMYY format)
  • The employee's Pay figure for the period of employment from 10 June to 15 September only should be entered at "(b) Pay (this employment)"
  • The employee's Tax figure for the period 10 June to 15 September only should be entered at "(b) Tax Deducted or Tax Refunded"
  • The Total Pay and Tax from all employments for the period 1 January to 15 September (including other employers, if any) should be entered on the P45 at "(a) Total Pay & Tax deducted from 1 January last to Date of Cessation"

The Total Pay figure should include the sum of:

  • Pay for Period 1: 1 January to 25 March
  • Pay details from other employment(s): 26 March to 09 June (if any)
  • Pay for Period 2: 10 June to 15 September

P45 entry - Please mark box if the tax figure at (b) is a refund

Enter an 'X' in this box if the tax figure entered under 'Tax Deducted or Tax Refunded' has been refunded to the employee in this period of employment i.e. you are confirming that this amount of tax paid by the employee in a previous employment has been refunded to the employee in this period of employment with you.

P45 entry - (c) Lump Sum Payment

Amount of Taxable Lump Sum Payment on termination included in either pay figure above - if applicable (Definition of pay part 5.12 and Information required to claim increased basic lump sum exemption)

If the employee received a taxable lump sum payment, enter the amount here. Note this figure should also be included in the pay figure(s) at (a) and/or (b) above.The figure entered should be rounded down to the nearest €.

P45 entry - (d) Taxable Illness Benefit

Total amount of taxable Illness Benefit included in pay figure above - if applicable (See Definition of Pay part 5.11 & Calculation of tax under the PAYE system part 11)

Enter amount of taxable Illness Benefit (formerly known as Disability Benefit) received by employee included in (b) Pay (this employment) figure. The figure entered should be rounded down to the nearest €.

(e) Amount by which Tax Credits were reduced - if applicable

Enter the amount by which you have reduced the employee's tax credits in respect of Illness Benefit. The figure entered should be rounded down to the nearest €. Where this section (e) is completed, section (f) must also be completed.

(f) Amount by which Standard Rate Cut-Off Point was reduced - if applicable

Enter the amount by which you have reduced the employee's Standard Rate Cut-Off Point in respect of Illness Benefit (formerly known as Disability Benefit) received. The figure entered should be rounded down to the nearest €. Where this section (f) is completed, section (e) must also be completed.

P45 entry - PRSI - This Employment Only

This employment means this latest period of employment.

Total PRSI

Enter the total amount of PRSI in respect of this period of employment only. Total means the Employee's share plus the Employer's share

Employee's Share

Enter the amount of PRSI deducted from the employee in this period of employment only.

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4. Payments made after date of cessation and before following 1 January

A payment made after the date of cessation that is not included in form P45 should be dealt with for tax purposes in the following way:

  • if a tax credit certificate is held by the employer, the employer must deduct tax on the arrears by reference to the former employee’s tax credits and standard rate cut-off point as if the payment is being made on the date the employee ceased to be employed by the employer
  • if no tax credit certificate is held by the employer, the emergency basis of tax deduction should be applied to the arrears.

(Note: Prior to 1 January 2009 these payments were dealt with on a week 1/ month 1 basis)

The PAYE/PRSI entries should be made on the PAYE/PRSI record for the income tax week or month in which payment is made. Form P45 Supplement should be completed and sent to the employee's Revenue office immediately.

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5. Payments made after 31 December where the employee left before that date

With effect from 1 January 2010, where a former employee receives a payment of arrears of pay in the year(s) following the year of cessation of employment, the emergency basis of tax deduction should be applied to the arrears.

The PAYE/PRSI entries should be made on the PAYE/PRSI record for the income tax week or month in which payment is made. Form P45 Supplement should be completed and sent to the employee's Revenue office immediately.

For the year 2009 the following procedure applied:

  • if a tax credit certificate (for the year the employee ceased employment) was held by the employer, the employer deducted tax on the arrears by reference to the former employee’s tax credits and standard rate cut-off point as if the payment was being made on the date the employee ceased to be employed by the employer
  • if no tax credit certificate (for the year the employee ceased employment) was held by the employer, the emergency basis of tax deduction was applied to the arrears.

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6. Death of an employee: arrears payments to personal representatives

If the amount of outstanding pay is known when the form P45 is being prepared it should be included in the pay figure on the form and PAYE should be operated accordingly. If it is not known, part 1 of the form should be marked "further payment to be made" and form P45 Supplement should be completed and sent to the employee's Revenue office as soon as final payment is made.

Where a payment, which was not shown on the form P45, is made to the personal representative(s) the payment is dealt with for tax purposes in the following way:

Arrears payment made in the year of death

  • if a tax credit certificate is held by the employer, the employer must deduct tax on the arrears by reference to the former employee’s tax credits and standard rate cut-off point as if the payment is being made at date of death
  • if no tax credit certificate is held by the employer, the emergency basis of tax deduction should be applied to the arrears.

Arrears payment made in the year(s) following the year of death

With effect from 1 January 2010, where a former employee receives a payment of arrears of pay in the year(s) following the year of death, the emergency basis of tax deduction should be applied to the arrears.

The PAYE/PRSI entries should be made on the PAYE/PRSI record for the income tax week or month in which payment is made.

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7. Employee retiring on a pension paid by the employer

If an employer has one registration number for both employees and pensioners, an employee who retires on a pension paid by the employer should not be treated as having left the employment. A form P45 should not be completed. The pension should be included on the PAYE/PRSI record as though it represented continuation of pay, and deduction or refund of tax should continue in the normal way. See also the PRSI Guide regarding change of contribution class.

However, the employee may retire at an age when they may be entitled to make a claim for Jobseeker's Benefit (formerly known as Unemployment Benefit) from the Department of Social Protection and such a claim is normally initiated by giving a form P45 (Parts 2, 3 and 4) to the employee's Social Welfare local office. In these circumstances the employer should give the retiring employee a letter setting out the facts of the situation and including the information that would be entered on a form P45 if it were completed. The employee can then give this letter to their Social Welfare local office.

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8. Employee retiring on a pension paid by the employer and dealt with under a separate registration number or paid by a separate body (trust fund, life assurance company etc.)

While a form P45 should be completed in the ordinary way on cessation of employment, a convenient practice is sometimes adopted whereby the Parts 2, 3 and 4 of the P45 are given directly to the pension paying "employer". If the retiring employee could be entitled to Social Insurance Benefit in circumstances similar to those set out in paragraph 7 the same procedure should be adopted i.e. a letter to the employee giving the required information.

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9. Employee transferred from one branch to another

(See Registration of employers for PAYE purposes part 7 regarding separate registration numbers for the same employer)

If an employee is transferred from one branch to another and each branch is treated as a separate operating point with its own distinct registered number in respect of which separate PAYE/PRSI returns are made, the employer must operate the P45 procedure on the occasion of each transfer.

Where there are a number of employees in the same category, the employer may find it more convenient to submit to their own Revenue office a list of these transferred employees, stating their date of transfer and their pay and tax figures to their date of transfer. This will enable Revenue to transfer the employees from one registration number to the other. If any difficulty arises, the employer should consult with Revenue.

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10. Married (non-assessable spouse) employee becoming a widow(er)

Under Joint Assessment the tax credits and reliefs available to a married couple can be divided between each spouse to suit their circumstances. One spouse is nominated as the 'assessable spouse' and as such is responsible for completing the tax return for the couple and is chargeable to tax on their joint income. The other spouse is referred to as the 'non-assessable spouse'.

Where the assessable spouse dies and the non-assessable spouse remains in employment, Revenue will issue a new tax credit certificate.

The employer should set up a separate pay record with effect from the date of death of the employee's spouse.

Revenue may allocate a new PPS number to the widow/widower. Where this happens Revenue will notify the employer of the new PPS number.

It will be necessary to have two separate entries on the end-of-year return, Form P35, one in respect of the period from 1 January to the date of death of the employee's spouse and the other in respect of the period commencing from the date of death of the employee's spouse.

See PRSI Guide from the Department of Social Protection regarding a possible change in contribution class http://www.welfare.ie/EN/Publications/SW3/Documents/sw3.pdfExternal link

Revenue will notify the employer of any change in the employee's tax credits and standard rate cut-off point and/or any instructions in regard to the employee's PPS number and PAYE record. In the meantime the employer must operate PAYE in accordance with the last tax credit certificate.

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