What is P60 form?

A P60 form is a key document for helping you to manage your tax and finances.

A P60 form summarises your earnings and tax contributions for a tax year. It shows how much tax you’ve paid on your salary for any jobs you have had in that tax year. Issued by employers after the end of the tax year, it serves as proof of taxable income and income tax paid by an employee.

A P60 form should be given to all employees by their employer at the end of the tax year. It acts as an end of year certificate of your earnings, tax code, taxes paid and national insurance contributions made.

If you have more than one job and are working for different employers, then each employer must give you a P60 form for the tax year ending on 5 April. Your payroll department or HR department from each employer must provide this by 31 May, on paper or electronically.

The P60 acts as an annual summary of your earnings and tax status. It shows earnings and tax status.

What information is contained on a P60 form?

The P60 form contains a wide range of important information such as:

Personal information & employer details

Name, Address, Employers full name, National Insurance Number, Works/Payroll Number

Pay and Income Tax details

Total pay from your former employer and current employer and the income tax deducted.

National insurance contributions made by your current employer

National insurance contributions deducted including earnings above the Lower Earnings Limit (LEL) and Earnings above the LEL, Earnings above the PT, up to and including the Upper Earnings Limit (UEL).

Statutory payments

Statutory maternity pay, statutory paternity pay, statutory shared parental pay, statutory adoption pay, pension contributions and statutory sick pay.

Other details

Student loan deductions, postgraduate loan deductions.

Employer’s final pay and tax figures

A summary of your final pay and tax figures for the year, useful for your personal financial records.

Who should get a P60 form?

If you are receiving a salary on 5th April from one or multiple jobs, you should receive a P60 from your employer. If you run a limited company and pay yourself a salary, you must issue a P60 for yourself. If you use your accountant to process payroll for your limited company, your accountant should provide your P60 forms.

Because a P60 is a record of your PAYE earnings and tax over a year, if you are a self-employed sole trader, you won’t get or need a P60. Being self-employed, sole traders use Self Assessment tax returns instead of PAYE to declare earnings and tax status for the tax year. While you don’t get a P60, it’s important to maintain accurate records of your earnings and expenses throughout the year. This documentation will be essential when it’s time to file your return at the end of the tax year.

If you are a sole trader who employs others, then you will be required to issue P60 forms for all your employees.

Why is a P60 important?

P60 form is important for several reasons and understanding its significance can help you manage your finances and tax affairs more effectively. Let’s explore why this document is so important:

Why do I need a P60 form?

It is important you get a P60 from your employer(s) and keep it for your own tax records as it’s an annual snapshot of your personal tax affairs and your financial year at work. It’s a valuable record that can help you:

1. Check if you’ve paid the right amount of tax: The form will show tax deductions for the tax year, so you can check you’ve paid the right amount of tax and national insurance. .
2. Proof of income: Your P60 serves as official evidence of your earnings for the tax year. This can be invaluable when applying for loans, mortgages, or rental agreements, as it provides a clear record of your financial status.
3. Tax return accuracy: If you need to file a Self Assessment tax return, your P60 contains essential information to ensure you report your income correctly. This helps you avoid errors and paying too much tax that could lead to penalties or reclaiming a tax refund.
4. Tax refund claims: If you think you’ve overpaid income tax, your P60 is a key document to claim tax rebates. It provides the exact figures needed to calculate overpaid tax and any potential tax rebate that may be due.
5. National Insurance Contributions (NICs): Your P60 shows your NICs for the year. This is important for tracking your eligibility for state benefits and your State Pension.
6. Financial planning: By reviewing your P60, you can get a clear picture of your annual earnings and deductions, which is helpful for budgeting and financial planning.
7. Employment verification: In some cases, your P60 may be required as proof of employment, particularly if you’re changing jobs or applying for certain benefits.
8. Checking for errors: Your P60 allows you to verify that your tax code and personal details are correct. Spotting and correcting errors early can prevent future tax complications.
9. Historical record: Keeping your P60s over the years provides a valuable record of your employment and earnings history, which can be useful for various purposes in the future.
10. Claiming tax credits: If you need to apply for any sort of tax credits, you will need a P60 form to prove income in any tax year.

Remember when you get a P60 keep it safe. You never know when you might need it!

What to do if you’ve lost your P60

Losing important documents can be stressful. However, there are several steps you can take to resolve this situation:

1. Ask your employer or former employer for a replacement P60: This is the simplest and most direct solution. Your employer is required by law to provide you with a P60, so they should be able to issue a replacement. Contact your HR department or payroll team and explain that you’ve lost your original P60. They should be able to provide you with a new copy. If you’ve changed jobs during the year, your previous employer should still provide you with a P60 for the period you worked with them.
2. Check your online payroll system: Many companies now use digital payroll systems. Log into your employee account and look for a section on tax documents. You might find a downloadable version of your P60 there.
3. Use your final payslip of the tax year: While not a perfect substitute, your last payslip of the tax year (usually from March) often contains similar information to your P60. This can be useful for immediate needs while you wait for a replacement.
4. Contact HMRC: If you can’t get a replacement from your employer (for example, if the company has closed down), you can contact HMRC. They can provide you with the information that would be on your P60.
5. Check your personal records: You might have saved a digital copy on your computer or cloud storage without realising it. Do a thorough search of your files and emails.
6. Use alternative documents for immediate needs: If you need the P60 information urgently (for a mortgage application, for instance), explain the situation to the requesting party. They may accept alternative proof of income temporarily. As soon as you realise your P60 is missing, take action to replace it. This will ensure you have this important document when you need it for tax returns, loan applications, or other financial matters.

What to do with your P60 form

It’s important to keep your P60 safe, as it’s a key document for tax purposes, loan applications and verifying your income.

P60 forms employer information

You must give all employees a P60 at the end of each tax year, and a P45 when they stop working for you. Use your payroll software or your payroll provider/accountant to produce them, unless your software cannot do this, or you’re exempt from filing online.

As an employer, your responsibilities include:

• Issuing P60s & timeline: Employers must issue a P60 to each employee who is on their payroll at the end of the tax year. This must be done by May 31st following the end of the tax year on April 5th.
• Provide up to date and accurate information: As with all tax reporting your P60s must include total earnings, tax deducted, National Insurance contributions, and any statutory payments. Errors can lead to tax discrepancies, issues for your employees and potential penalties.
• Provide P60s in either digital or paper format: You can issue P60s either as a paper or electronic version. You should ensure that P60s are easy to access by employees, typically via a secure online payroll system.
• HMRC compliance & record keeping: As an employer, you must keep records of all P60s for at least three years.
• Errors: If one of your employees notifies you of an error on their P60, you are responsible for issuing a corrected P60 and ensuring that HMRC is informed of the changes.
• Employee support: You should provide guidance to employees on their P60s and answer any questions they might have.

What is the difference between P45 and P60 forms?

While a P60 and P45 are different documents, they are both important tax documents, they serve different purposes and are issued at different times. Here’s a summary of the key differences:

P60 form

A P60 is an end of year certificate that summarises your total earnings and tax deductions for the entire tax year (April 6 to April 5). Here are its main features:

1. Issued annually: You receive a P60 after the end of each tax year, typically by May 31.
2. Comprehensive overview: It shows your total income and all the tax you’ve paid for the year.
3. For current employees: Only given to people employed at the end of the tax year.
4. Multiple employers: If you’ve had multiple jobs, you’ll get a P60 from each employer.
5. Used for various purposes: Helpful for Self-assessment tax returns, mortgage applications and claiming tax refunds.

P45 form

A P45 is a document you receive when you leave a job. It’s different from a P60 in the following ways:

1. Issued when employment ends: You get a P45 whenever you stop working for an employer, regardless of the time of year.
2. Partial year information: It shows your earnings and tax paid from the start of the tax year up to your leaving date.
3. For departing employees: Only given when you leave a job, not if you’re still employed.
4. Passed to new employers: You give your P45 to your next employer when starting a new job.
5. Used for tax code calculation: Helps your new employer determine the correct tax code.

Key differences

1. Timing: P60s are annual, while P45s are issued when you leave a job.
2. Purpose: P60s provide a yearly summary, while P45s help with transitioning between jobs.
3. Information covered: P60s show full-year data and P45s show partial-year data up to your leaving date.
4. Recipients: P60s go to current employees, P45s to those leaving their jobs.
5. Number received: You get one P60 per job per year but can receive multiple P45s if you change jobs frequently.

Summary

The P60 form is an important document in the UK tax system, summarising an employee’s total pay and tax deductions for the financial year. Issued by employers after the end of the tax year, it serves as proof of income and tax paid, which is essential for tax returns, loan applications, and verifying income.

At dns accountants we offer comprehensive payroll services for employers, taking the stress out of managing your employees’ pay and tax documents. Our team of experts can handle everything from generating P60s to ensuring your payroll processes are efficient and compliant with current regulations.

Contact us today at 033 0088 3616, email contact@dnsaccountants.co.uk, or book a free consultation.

Frequently asked questions for small business accountants

What if my P60 isn’t correct?

If you find any errors on your P60 you should inform your employer or pension provider immediately. They are responsible for correcting mistakes and providing you with an updated P60.

How do I get a P60 if I work multiple jobs?

Each employer you work for should give you a separate P60 which details your earnings and the tax you paid in the period you were employed by them. For example, if you work in two jobs for two separate companies, you should get a P60 from each company at the end of the tax year.

Can I get a P60 for previous years?

Contact your employer or pension provider if you need a P60 from a previous tax year. If they cant provide a copy, contact HMRC for a replacement. HMRC can only provide a replacement P60 for the past six tax years.

Do I need a P60 as a sole trader?

Since you don’t draw a salary as a sole trader (but earn your income directly from the profit you make), then you won’t need to issue yourself with a P60. However, if you are a sole trader that has employees, you’ll need to issue P60 forms for each employee. If you are a sole trader but also receive a salary from other sources, you should get a P60 from your employer(s).

What if I use an umbrella company?

If you are a contractor operating through a UK umbrella company, then you should a P60 from your umbrella company.

Speak with an expert

Any questions? Schedule a call with one of our experts.

Book a call