It is a disturbingly common practice among contractors to move from one umbrella payroll provider to another whilst they are working with recruitment agencies.

This can be down to a number of reasons including an agency insisting that you use one of their ‘prefered’ umbrellas, to the worker believing that the new umbrella can waive a magic tax-reducing wand.

The majority of the time it is down to an agency instructing a new worker to select an umbrella from a predefined list (their PSL), which their current umbrella may not be on. Even though it should be fair game for all FCSA accredited umbrellas, it is an agencies prerogative to insist on a select few for their PSL for whatever reason.

Why Should You Request A P45?

A P45 is a form that is issued to an employee when they leave their employment in the UK. This form provides important information about an individual’s employment history, including their total taxable income and tax paid to date. It is an essential document for both the worker and the tax authorities. In this article, we will explore the reasons why a worker should request a P45 when leaving their employment.

  • Tax purposes: The P45 is a crucial document for tax purposes as it serves as evidence of the worker’s total taxable income and tax paid to date. This information is necessary for the worker to complete their tax returns and ensure they are paying the correct amount of tax.
  • Proof of employment history: The P45 also provides a record of the worker’s employment history, including the dates they worked for the company and the tax year in which they worked. This information can be useful for future job applications and for maintaining a comprehensive record of their employment history.
  • Transfer of tax code: When a worker starts a new job, their new employer will need to know their tax code in order to calculate the correct amount of tax to deduct from their wages. The P45 provides this information, ensuring a smooth transition of tax codes between jobs.
  • Claiming benefits: If a worker is entitled to claim benefits, such as Jobseeker’s Allowance, they may need to provide evidence of their employment history. The P45 provides this evidence, making it easier for the worker to claim the benefits they are entitled to.

Employment History

Every time a worker requests a P45 and ends their employment, their employment history resets. This means if the worker has been employed by the umbrella for say two years, then once a P45 has been issued and a new job or umbrella has been found, the employment history starts again from zero.

Employment history is a key question in a number of applications the main ones being a mortgage or rental application, or a loan application. The shorter the work history, the more difficult a successful application will be.

Tax Code

As your tax code is reflective of your employment and earnings, it is key that HMRC have up to date records of your employment status. If you have left your current umbrella, moved on to a new umbrella (or full/part time employment) but not requested your P45, HMRC will have you listed as having two jobs. Once the payment information has been reported to HMRC via  RTI, it is most likely you will be placed on a BR tax code. Generally the job that the P45 should have been requested on will be listed as the main job and will have the tax allowance applied. The new job will then be taxed at the full 20% if this is the case.

Earnings To Date

Your P45 will contain your earnings and deduction history to date for the current financial year. It is essential that you give your P45 to your new employer/umbrella to ensure that you start your new job on the correct tax code and earnings to date. Without this information, HMRC could assume that you still have all of you annual earnings allowance and you could underpay your tax. If this happens HMRC WILL claim it back from you via your tax code or one off payment.


In conclusion, the P45 is a crucial document for workers leaving their employment in the UK. It provides important information for tax purposes, proof of employment history, the transfer of tax codes, and the claiming of benefits. Workers should make sure to request a P45 when leaving their employment to ensure they have the necessary information for their future. If you are no longer with your umbrella/employer, allways request your P45 and pass it on to your new umbrella/employer.

Please note: a P45 can only be issued once you have received your last payment from the umbrella. If your agency is on 30 day payment terms, this means you will have to wait for 30 days before the P45 can be issued even if you have started with your new employer.