What is the Starter Checklist (P46)?

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When you start working through an umbrella company, you might be asked to fill in a Starter Checklist form. This calculates your tax, but it’s a bit more complex than that alone.

In this guide, we’ll explain what the Starter Checklist is, why it matters and how you should fill it in.

What is the Starter Checklist?

Essentially, the Starter Checklist helps your new employer (including your umbrella company) to ensure you pay the right amount of tax. Otherwise, you’ll be assigned an emergency tax code – meaning you’ll likely pay more than necessary.

Do you need a Starter Checklist if you have a P45?

You don’t need to worry about the Starter Checklist if you’ve already given your new employer a P45.

If you’re a contractor working through a limited company and in the process of becoming an umbrella employee, your accountant can issue you with a P45. You’ll need to provide this to your umbrella company.

Where to find the Starter Checklist

You can find the Starter Checklist online. Either complete the form online or print a copy, if you’d prefer.

Sections of the Starter Checklist

You must provide the correct information on the form.

The Starter Checklist is short and fairly straightforward, but we’ve explained below what each section covers:

Employee Statement A

Choosing Statement A means you haven’t received any other taxable income since the start of the tax year.

By choosing Statement A, you’ll be assigned the standard tax code, which entitles you to the full tax-free personal allowance of £12,570 for that tax year.

Employee Statement B

Statement B means that you have received other taxable income since the start of the tax year.

You’ll be temporarily assigned either the M1 or W1 tax code, depending on whether you’re paid monthly or weekly. This is a non-cumulative tax code and means no brought forward income or tax is considered when calculating the tax owing. HMRC will tell your employer your new tax code soon after.

Employee Statement C

Statement C means that you receive other taxable income alongside your salary and aren’t eligible for any personal tax-free allowance.

You’ll be placed on a BR tax code, which means your employer will apply tax at a flat rate of 20%. NB: This could mean you underpay tax for the year and we would suggest that you contact HMRC to issue a new tax code so this does not happen.

What happens if I select the wrong statement?

Choosing the wrong statement on the form means you could either pay too much or too little tax. As such, it’s important to make sure you select the correct statement, to avoid any issues with HMRC down the line.

To recap, the Starter Checklist is a document you’ll need to fill in for your new employer or umbrella company so that you pay the right amount of tax, if you cannot provide a P45.

If you have any questions about the Starter Checklist or want to learn more about working through an umbrella company, please get in touch.