Starting or leaving employment (P45)

The death of an employee or their spouse or civil partner

Death of an employee: arrears payments to personal representatives

The amount of outstanding pay may be known when a P45 is being prepared. If so it should be included in the pay figure on the form, and Pay As You Earn (PAYE) should be operated accordingly.

Where a payment not shown on a P45 is made to the personal representative(s) it is dealt with for tax purposes as below.

Arrears payment made in the year of death

If the employer has a Tax Credit Certificate (P2C) they must deduct tax on the arrears. This should be done by reference to the former employee’s tax credits and tax and USC cut-off points as if the payment is being made at date of death.

If no P2C is held by the employer, the emergency basis of tax deduction should be applied to the arrears.

A P45 supplement should be completed and sent to the employee's Revenue office immediately.

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

A former employee might receive a payment of arrears in the year(s) following the year of death. If so the emergency basis of tax and USC deduction should be applied to the arrears.

The PAYE and Pay Related Social Insurance (PRSI) entries should be made on the PAYE and PRSI record for the Income Tax week or month in which payment is made.

A P45 supplement should be completed and sent to the employee's Revenue office immediately.

Death of a spouse or civil partner

Under joint assessment the tax credits and reliefs available to a couple in a marriage or civil partnership can be divided between each spouse or civil partner to suit their circumstances. One spouse or civil partner is nominated as the 'assessable spouse' or 'nominated civil partner'. The assessable spouse or nominated civil partner is responsible for completing the couple’s tax return and is chargeable to tax on their joint income. The other spouse or civil partner is referred to as the 'non-assessable spouse' or 'other civil partner'.

Where the assessable spouse or nominated civil partner dies and the non-assessable spouse or other civil partner remains in employment, Revenue will issue a new P2C.

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

Revenue may allocate a new Personal Public Services Number (PPSN) to the widow(er) or surviving civil partner. Where this happens Revenue will notify the employer of the new PPSN.

It will be necessary to have two separate entries on the end of year return (P35). One entry will be for the period from 1 January to the date of death of the employee's spouse or civil partner. The other entry will be for the period commencing from the date of death of the employee's spouse or civil partner.

See the PRSI guide from the Department of Employment Affairs and Social Protection (DEASP).

Revenue will notify the employer of any change in the employee's tax credits and tax and USC cut-off points. We will also give instructions in regard to the employee's PPSN and PAYE record. In the meantime the employer must operate PAYE in accordance with the latest P2C issued.

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