When an employee leaves your company, please make sure to enter their leaving date accurately in their profile. 

This helps keep everything aligned with the correct tax year and pay period. 

The P45 will only become available on the system once the final pay period for this employee is finalised.

Once these steps are complete, you can then send the FPS which contains the leave date. 

You will then be able to produce the P45 and give this to the employee as required.

If you have entered a leave date in error, you will need to re-open the payslip to be able to remove the leave date. If the FPS with the leave date has already been submitted to HMRC; re-open the payslip and remove the leave date. Finalise the payslip again and then send an additional FPS > correction to earlier submission for this employee.

The leave date for the employee will be visible on the FPS. If no leave date is there, please check that the leave date entered into the employee's record falls within the finalised period.

Note on new starters & P45s in BrightPay:

• Only enter previous employment figures from a P45 if the P45 is dated within the same tax year as when the employee started with you.
• If the P45 is dated before 6th April (from the previous tax year), do not enter these figures for the new tax year in BrightPay. Only P45s dated 6th April or later should have their previous employment figures entered.
• Previous tax year earnings should not be included in the Year-To-Date (YTD) figures for the new tax year.

If previous employment figures have been entered in error:

• Ensure the payslip for the employee is open.
• Go to Edit Settings > Employment.
• Set Previous employment Gross Pay and Tax Paid to £0.
• Untick the field labelled ‘employee had previous employment in 26/27 tax year’.
• Save changes.

This will remove incorrect previous employment figures from the employee’s YTD totals for the current tax year.

BrightPay will not calculate PILON for an employee leaving, this will have to be done manually and then entered into BrightPay. If you are unsure how to calculate or what the employee is due, please contact HMRC or ACAS for more advice.

Processing a Final Payroll for a Deceased Employee

When an employee passes away, their final payroll must be handled carefully to ensure the correct tax and NI treatment is applied and HMRC is notified accurately. Follow the steps below:

NI Letter - Earnings paid after an employee's death are not subject to National Insurance. You should update the employee's NI letter to X to reflect this. To do this, go to the employee's record > Tax/NIC/RTI section and update the NI letter to X. This ensures no NI deductions are made on any final payments processed after that date.

Tax Code - Continue using the employee's existing tax code for their final payroll. Earnings paid after death remain subject to income tax in the normal way — the tax code does not change as a result of the employee's death.

Reporting to HMRC via FPS - When submitting the Full Payment Submission (FPS) for the final pay period, you must:

• Set the leaving date to the date of death (in the Starter/Leaver section enter the leave date as the date of death and tick the 'employee is deceased' field).
• Ensure the Deceased indicator is checked on the employee's record before processing payroll and submitting to HMRC.

This informs HMRC that the employee has passed away and ensures their record is updated correctly. BrightPay will include the deceased indicator and leaving date in the FPS submission automatically once these have been set.