Switching Jobs: What Happens to Your Pay and Benefits
Leaving your first job for a second one feels simpler than it is — pay, pension, holiday and tax all move at slightly different speeds, and the gap between “I resigned” and “everything is sorted at the new place” is where most of the confusion happens.
By the First Wage Editorial Team · Published 18 September 2026 · 10 min read
The Short Answer
When you switch jobs, your final pay (including any unused holiday) is settled by your old employer, your P45 transfers your tax history to your new employer so you’re not overtaxed, your pension pot stays yours but doesn’t automatically merge with a new workplace scheme, and most benefits (private healthcare, gym memberships, etc.) end on your last day unless your contract says otherwise. The main financial risk in switching jobs isn’t any single one of these — it’s the combination of a possible pay gap, a possible emergency tax code at the new job, and forgetting to track down old pensions.
Your Final Pay From the Old Job
Unused holiday. You’re generally entitled to be paid for any statutory holiday you’ve accrued but not taken, calculated pro-rata to your leaving date. If you’ve taken more holiday than you’d accrued, your employer may deduct the difference from your final pay, depending on your contract.
Timing. Final pay usually follows the normal payroll schedule rather than being paid out immediately on your last day, though this varies by employer — worth confirming directly rather than assuming.
Your P45. This document summarises your pay and tax for the current tax year up to your leaving date, and you’ll need to give it (or the details from it) to your new employer so they can apply the correct tax code from the start, rather than an emergency one.
Starting the New Job: Avoiding an Emergency Tax Code
If your new employer doesn’t have your P45 details in time for your first payslip, they may apply an emergency tax code, which can mean paying more tax than you actually owe in the short term. This usually self-corrects once your correct tax code is applied, and overpaid tax is refunded through your pay — but handing over your P45 (or completing the starter checklist accurately if you don’t have one) as early as possible avoids the issue altogether. See our guide on your first payday for more on how this works.
What Happens to Your Pension
Your pension pot from your old job doesn’t disappear, transfer automatically, or merge with your new employer’s scheme — it stays exactly where it is, under your name, until you decide to do something with it. When you start your new job, you’ll typically be auto-enrolled into a new workplace pension there (assuming you meet the eligibility criteria), which is a separate pot from your old one unless you actively arrange a transfer.
This means that after a few job changes, it’s common to have several small pension pots scattered across different providers. Consolidating them isn’t urgent, but it’s worth doing eventually — tracking down old pensions gets harder the longer you leave it, particularly if you’ve moved house and providers no longer have your current address.
What Happens to Benefits and Perks
Most non-statutory benefits — private healthcare, gym memberships, life insurance provided through work, income protection — end on your last day of employment unless your contract or the specific scheme says otherwise. It’s worth checking whether any benefits have a “continuation” option (some healthcare schemes let you continue coverage privately at your own cost) if losing them abruptly matters to you.
Season ticket loans, if you have one, typically need to be repaid in full from your final pay if you leave before the loan term ends — worth checking the specific terms if you have one outstanding.
Managing the Gap Between Jobs
If there’s a gap between your last day and your new start date: you won’t be paid during it unless you’ve specifically negotiated otherwise, and it’s worth budgeting for this in advance rather than assuming pay continues seamlessly. Even a short gap of a week or two between a final payslip and a first payslip at a new job can be a meaningful cash flow squeeze if you haven’t planned for it.
If you’re moving straight from one job to the next with no gap, the main things to get right are handing over your P45 promptly and double-checking your first payslip at the new job to make sure the tax code and any pension enrolment look correct.
What to Check Before You Resign
- Notice period. Confirm exactly how much notice you owe based on your contract and length of service — see our guide on contracts, probation and notice periods if you’re not sure.
- Unused holiday. Knowing roughly how much you’re owed helps you sense-check your final payslip.
- Outstanding loans or advances, like a season ticket loan, that might be deducted from your final pay.
- Start date overlap or gap with your new role, and whether you’ll need to cover any period without income.
Common Mistakes When Switching Jobs
Not handing over the P45 promptly, leading to an avoidable emergency tax code at the new job.
Assuming benefits continue past the last working day without checking — most don’t, automatically.
Losing track of old pension providers, especially after multiple job changes, making consolidation much harder years later.
Not budgeting for a pay gap between final pay from the old job and first pay from the new one, particularly if there’s any gap in employment dates.
First Wage Takeaway
Switching jobs is one of the few moments where several separate financial threads — final pay, tax code, pension, benefits — all need attention at once. None of it is complicated individually, but it’s easy to let one slip (usually the P45 handover or an old pension) simply because so much else is happening at the same time. A short checklist before you resign saves most of the common problems.
Frequently Asked Questions
Do I need to do anything with my old pension when I switch jobs?
Not urgently — it stays yours and remains invested. Consolidating it with a new pension or a personal pension is optional and can be done at any point, though it’s easier to arrange sooner rather than years later.
What if I don’t have my P45 when I start a new job?
You’ll complete a starter checklist instead, which lets your new employer apply a reasonably accurate tax code even without the P45 — though it’s still worth requesting your P45 from your old employer for your own records.
Will I be taxed twice if I have two jobs briefly overlapping?
Not exactly “twice,” but your tax-free Personal Allowance is usually only applied to one job at a time, so a second concurrent job may be taxed at a flat rate until your tax code is adjusted — this generally evens out over the tax year, but is worth being aware of if you have overlapping employment.
Can my old employer refuse to give me a reference?
There’s no general legal obligation to provide a reference in most cases (some regulated industries are an exception), though many employers do so as standard practice — worth checking what your specific employer’s policy is if it matters for your move.