When you take on a new employee who does not have a P45, you record their starter declaration. It comes from the HMRC starter checklist and tells Moonworkers which tax code to use, so the employee pays the right tax from their first payday. It is reported to HMRC on the Full Payment Submission. There are three statements.
Statement A
This is the employee's first job since 6 April and they have had no other taxable income. They are given the standard tax code, 1257L, on a cumulative basis.
Statement B
This is now their only job, but they have had another job, or received taxable benefits such as Jobseeker's Allowance, since 6 April. They are given the 1257L tax code on a Week 1 or Month 1 basis, which taxes each pay period on its own rather than across the year.
Statement C
They have another job or receive a pension as well as this job. They are given the BR tax code, which taxes all the pay from this job at the basic rate.
If they have a P45
If the employee gives you a P45 instead, you use the figures and tax code from the P45 rather than a starter declaration.
Get started
You record this when you add an employee, in People > Employee list > Add employee. Not signed in yet? Log in at https://payroll.moonworkers.co.uk/auth/login