How to remove an employee from your payroll when they leave your business

This article explains how to submit an employee’s leaving date to HMRC on an RTI submission when submitting their final salary.

Please note that FreeAgent's payroll functionality won't be available if you have an unincorporated landlord or non-UK account type, or if you're preparing your accounts using cash basis accounting.

When an employee leaves your business, you will need to submit their leaving date to HMRC and edit their final payslip to pro-rata their salary before filing the payroll. If a leaving date has been added and sent to HMRC in error, you can remove the leaving date as long as you do so before you file the next month’s payroll.

Please ensure that the details of each employee’s pay for the tax year is correct before adding the leaving date as you won’t be able to edit previous month’s payslips once the leaving date has been submitted to HMRC.

You will need full (level 8) access to FreeAgent to be able to edit a payroll profile and edit a payslip.

Enter a leaving date

First, you need to enter a leaving date in your employee’s payroll profile.

Navigate to the ‘My Money’ tab at the top of the screen and select ‘Payroll’ from the drop-down menu.

In the ‘Employees’ section, select ‘Edit Profile’ to the right of the relevant employee’s name.

Scroll down to the ‘Leaving Details’ section and select ‘Yes’ to ‘Employee leaving during the next pay run?’. Then, enter their leaving date in the ‘Employee Leaving Date’ field and select ‘Update Payroll Profile’ at the bottom of the screen to complete the process.

For more information on editing a payroll profile, please see this article.

Edit the payslip

If the employee will be receiving a different amount for their final salary, you will need to edit their payslip and pro-rata their salary before filing the payroll to HMRC.

Navigate to the ‘My Money’ tab at the top of the screen and select ‘Payroll’ from the drop-down menu.

Select ‘Prepare Month [X] Payroll’ in the top-right of the screen. ‘X’ will be the number of the month for which you’re filing payroll.

Select ‘Edit Payslip’ to the right of the relevant employee’s name.

Scroll down to the ‘Pay’ section and make the relevant changes.

Select ‘Save Changes’ at the bottom of the screen to complete the process.

You can then file the payroll to HMRC using FreeAgent or mark the payroll as filed if you’re filing outside of FreeAgent.

What happens next?

If you file the payroll to HMRC using FreeAgent, this will send the employee’s leaving date and final salary details to HMRC. If you mark the payroll as filed, you will need to send this information to HMRC outside of FreeAgent.

Once a leaving date has been entered into an employee’s payroll profile, they will no longer be included on your payroll and you’ll be able to access their P45 in FreeAgent.