Guidance

Payroll: what to do if your business merges or changes

Find out what to do with your payroll and PAYE reference numbers if your business changes but does not cease to trade.

From:
HM Revenue & Customs
Published
12 June 2014
Last updated
7 March 2024 — See all updates

Mergers and successions 

As an employer, there are times when you may need to use a different employer reference on your payroll. For example, if: 

  • you merge 2 or more of your PAYE (Pay As You Earn) schemes 
  • another legal entity takes ownership of your business and becomes responsible for the pay records — this is called a succession 

A succession may involve the sale of a business which is in liquidation or administration, carried out by an insolvency practitioner. 

If your business undergoes a merger or succession, contact the HMRC Employer helpline. They will: 

  • confirm whether the change is a merger or succession 
  • tell you which employer reference to use 
  • give you a new employer reference if you need one 

Moving employees from one payroll to another 

Moving employees to a new payroll under the same employer reference 

Continue to operate PAYE and report payroll information under the same employer reference. 

Moving employees to a new payroll under a different employer reference 

  1. Transfer the payroll records to the new employer reference.

  2. Send HMRC a Full Payment Submission (FPS) under the old employer reference — include leaving details, such as pay and tax figures for the year to date. 

  3. Provide employees who have transferred with details of their total pay and deductions up to the date they moved payrolls — you do not need to give them a P45. 

  4. Send HMRC an FPS under the new employer reference — read ‘Submit an FPS under a new employer reference’ for more information on what to include. 

  5. Update your payroll — read ‘What to do on your payroll’ for more information.


You must submit the last FPS from the old employer reference before submitting the first FPS for the new employer reference.

Submit an FPS under a new employer reference 

To create your first FPS under a new employer reference, you should: 

  • restart the year-to-date figures from zero 
  • include the full starting details for each employee 

You should use: 

  • the start date for the new payroll 
  • starter declaration C for Business Reference (BR) codes or codes starting with the letter D 
  • starter declaration B for any other code 

What to do on your payroll 

You must deduct these from any payments you make to employees after they move payrolls: 

  • PAYE tax 
  • National Insurance Credits

If you operate a cumulative tax code, use the pay and tax details from the old employer reference. 

Submit P11D forms if your business has experienced a PAYE scheme merger, succession or part scheme transfer 

The number of P11Ds you need to submit depends on the type of change your business has undergone. 

Merger 

If your business has merged PAYE schemes, submit 2 P11D forms for each employee receiving company benefits. You should submit: 

  • one form under the original PAYE reference covering the period up to the merger date 
  • one form under the new PAYE reference, covering the period from the merger date 

You only need to submit one P11D form if you have undergone a business merger but not a PAYE scheme merger. 

Succession 

If you have told HMRC about your business succession, submit one P11D form for each employee receiving company benefits. The P11D must: 

  • be submitted under the new PAYE reference 
  • contain all the information to be reported for both PAYE references 

If you have not told HMRC about your business succession, submit 2 P11D forms for each employee receiving company benefits. You should submit: 

  • one form under the old PAYE reference covering the period up to the succession date 
  • one form under the new PAYE reference covering the period from the merger date 

Part scheme transfer 

Submit 2 P11D forms for each employee receiving company benefits. 

One form should be submitted under the old PAYE reference and cover the period up to the transfer date. 

The other should be submitted under the new PAYE reference and cover the period from the merger date. 

Help and support 

Contact the HMRC Employer helpline if you need help.

Updates to this page

Published 12 June 2014
Last updated 7 March 2024 + show all updates

  1. Information updated to confirm you must send in a Full Payment Submission (FPS) under the old employer reference before reporting under the new employer reference. A new help and support section has been added.

  2. Guidance for employers on how many P11Ds must be completed for each employee when a business PAYE scheme merges or changes has been added.

  3. First published.

Sign up for emails or print this page

Contents

Related content