Even after an employee has left the business, they may be due additional payments such as holiday pay, bonuses, commissions, or other types of earnings. Once the P45 has been issued, HMRC's guidance is to treat any further payments as a 'payment after leaving'.
This means:
The payment is taxed without freepay, using a 0T M1 tax code (S0T M1 for Scottish taxpayers, or C0T M1 for Welsh taxpayers).
It's reported on the FPS.
The employee receives a payslip to detail the payments.
The employee does not receive a new P45.
Feature overview
✅ You can enable payment after leaving up to one month after the employee's termination date.
✅ P45s are issued in the month that the employee's contract is terminated. Later payments are taxed using 0T M1, S0T M1 (Scotland), or C0T M1 (Wales).
✅ You can enter a payment after leaving for any future month. The employee will receive a £0 payslip each month until the final payment is added.
❌ If the employee's status is 'P11D only', or they left more than 1 month ago and they're now 'archived', please contact us to enable this feature for you.
❌ You can't add payments after leaving in bulk.
Regular vs irregular payments
Before adding a payment after leaving, you need to choose whether it's a regular or irregular payment. This impacts how national insurance contributions and student loan repayments are calculated.
Tip: If the employee is receiving both regular and irregular payments after leaving in the same pay period, treat the payment as regular.
Irregular payments
These are unexpected or one-off payments, including:
Accrued holiday pay
Irregular bonuses or commissions
Termination payments such as notice pay
Statutory parental payments
Non-cash vouchers
Discretionary or lump sum payments
Regular payments
These are part of the employee's normal earnings pattern, including:
Hours worked in arrears
Overtime
Payments made on a recurring basis
Note: Directors' national insurance is calculated on a cumulative basis when they leave. The regular vs irregular rule doesn't apply. For more information about directors' national insurance, please refer to our Help Centre article.
Why it matters
The classification affects how deductions are calculated:
Type of payment | Tax | National insurance & student loan |
Regular | 0T/S0T/C0T M1 | Based on monthly thresholds |
Irregular | 0T/S0T/C0T M1 | Based on weekly thresholds |
So if an employee receives only irregular payments after leaving, NI and student loan deductions are calculated as if paid weekly, which may result in higher contributions.
Adding a payment after leaving
With contract termination
From the employee's record, choose the Employment tab.
Under the Contract section, click Terminate contract.
Enter the reason for leaving and dates, then click Continue to termination payments.
Add any termination payments, then click Continue.
Under the 3. Payment After Leaving section, choose Yes, keep them in payroll.
Choose how many months to keep them on the payroll.
If the employee's additional payments are irregular, toggle on the 'Irregular payment' option.
Click Save.
This will keep the employee on payroll (with £0.00 payslips) until the final payment month.
After contract termination
From the employee's record, click the Employment tab.
Under the Contract termination section, click Edit post-termination details.
Under the 3. Payment After Leaving section, select Yes, keep them in payroll.
Choose how many months to keep them on the payroll.
If the employee's additional payments are irregular, toggle on the 'Irregular payment' option.
Click Save contract termination.
Refresh your browser to see the employee's status change to Payment After Leaving.
FAQs
My employee is on maternity leave and is leaving the company. How can I ensure she receives the rest of her statutory pay?
Set the employee to 'payment after leaving' during the contract termination using an end date that matches the end of their SMP pay period. Toggle on the Irregular payment option. For more information about managing statutory maternity pay, please refer to our Help Centre article.
What does the payslip look like if I don't add any additional payments?
The payslip will show £0.00 each month until you enter a final payment.
When is the P45 issued to employees if I apply a payment after leaving?
The P45 is issued in the month that the employee leaves. Any payments processed after this are taxed without freepay (0T M1, S0T M1, or C0T M1) and no further P45 is issued.