Removing an employee from your payroll (source)
If a member of staff is leaving your business, you need to submit their leaving date to HMRC via an RTI submission at the same time that you submit details of their final salary. Here’s how to do this in FreeAgent.
Enter a leaving date
First, you need to enter a leaving date in your employee’s payroll profile. Go to My Money > Payroll, and then edit the profile of the relevant employee at the bottom of the page.
Once you're in your employee’s payroll profile, navigate to the question asking 'Will the next month that you run payroll be the final time this member of staff is being paid?' and answer 'Yes'.
You can now run payroll as normal.
If you choose to file your RTI payroll to HMRC directly through FreeAgent, this will provide them with the employee's final salary details. If you are are sending this information to HMRC in an alternative way, just mark the payroll as filed. After doing one of these two things, the employee you entered the leaving date for will no longer appear in any future payroll months.
Once a leaving date has been entered and saved, you will be able to download a P45 to give to that employee.