A P60 is a certificate of an employee's annual pay and deductions in the UK. It contains details of the total pay and deductions such as Pay As You Earn (PAYE), Pay Related Social Insurance (PRSI), Universal Social Charge (USC), and Local Property Tax (LPT). Employers must issue a P60 to each employee who was in employment on 31 December between 1 January and 15 February.
Employers issue P60 to employees at the end of each fiscal year. P60 shows the employee how much his employer paid him, as well as the NI taxes and contributions withheld by his employer for PAYE in a fiscal year. Also displays the employee's tax code.
In short P60 is a document issued by an employer in the United Kingdom to their employees at the end of the tax year. It shows the total amount of pay received by the employee and the total amount of tax and National Insurance Contributions (NICs) that have been deducted. It is important for employees to retain their P60s, as they may be required to provide them to HM Revenue and Customs (HMRC) or other organizations in certain circumstances.
The P60 will also show the employee's tax code, which is used to calculate how much tax they owe. The tax code is determined by HMRC and is based on the employee's income and personal circumstances. If the employee has multiple sources of income, they may have more than one tax code.
When Should an Employer Issue a P60?
Employers are required to issue P60s to their employees by the end of May following the end of the tax year. If an employee does not receive a P60 from their employer, they should contact their employer to request one. If an employee loses their P60, they can contact HMRC to request a replacement.
When Do Employees Need P60?
Employees may need to provide their P60 to a number of organizations, such as their bank or building society if they are applying for a mortgage, or to the Department for Work and Pensions (DWP) if they are claiming benefits. It is also useful for employees to have a copy of their P60 when they are completing their self-assessment tax return.
When an employee leaves their job, they should ask their employer for a P60 that covers the period they worked with them. The P60 will show the employee’s total pay, tax, and NICs for the tax year, including the pay earned whilst they, were employed by that employer.
Completing the P60 Pay and Tax Figures
When completing the P60, employers must consider various scenarios. For example, if an employee has worked for more than one period during the year, the pay figure for the latest period must be entered at Section (A) 3 of the form. The tax figure for that period should only be entered at Section (B) 3 on the P60, and USC for that period should be entered at (D) 3 and (E) 3 on the P60.
Cumulative Basis
Where a cumulative basis applies, the total pay and tax from all employments should be entered on the P60 at Sections (A) 1 and (B) 1, respectively. USC for all employments should be entered at (D) 1 and (E) 1. The 'date of commencement of employment' entered on the P60 is the date from the latest period of employment.
Should I Keep My P60 Form?
While an employer has to distribute payslips every time he pays staff, a P60 is a useful document to keep. It shows what is earned (and deducted) in a year and is often the easiest way to generate income and pay taxes. If you are self-employed, your P60 will help you complete the "job information" section of your tax return.
It's important to note that if an employee has multiple jobs or receives pension income, they may receive more than one P60. They should keep all P60s, as they may need to provide them to HMRC or other organizations.
Importance of P60
The P60 form is crucial for various reasons:
Proof of Income: It serves as a record of earnings and deductions for the year.
Tax Compliance: It helps in ensuring that the correct amount of tax is paid.
Loan Applications: It can be used as proof of income for loan or mortgage applications.
Tax Rebates: It can be used to claim tax rebates if eligible.
Employer's Responsibilities
Employers must ensure that the P60 is accurately filled and issued on time. They must also consider different scenarios, such as employees working for multiple periods during the year, and fill the form accordingly.
Difference Between P60 and P35L
The pay and tax entries required on the P60 are slightly different from the entries required on the P35L. An employee may have worked for the employer multiple times during the tax year. The pay and tax figures entered on the P35L are the combined pay and tax figures for all periods in that year.
Difference Between P60 and P45
P60: Shows everything you’ve earned during a given tax year.
P45: A form you get when you leave a PAYE job, including pay and tax details up to the point your employment ended.
How Do I Get P60?
The employer you work for at the end of the fiscal year must provide you with a P60 form. The fiscal year ends on April 5th of each year, so you usually get it in April or May. You will not get one if you are busy at the end of the fiscal year. If you leave your employer before the end of the fiscal year, you will receive a P45 instead of a P60. Getting a P60 isn’t usually stressful. If you’re paid through PAYE, you should be sent a P60 form every year within a couple of weeks of the tax year ending. If you haven’t received your P60 by the end of May, it’s time to chase up your employer.
Do I Get a P60 From Every Employer?
If you have more than one employer, you will receive a separate P60 from each employer. Individual P60s declare only the tax and income deductions relating to the employer in question. If you file a tax return yourself, don't forget to include the details of each employer - you will need the individual P60s to help you.
Do I Have to Print My Employees' P60?
As an employer, you can provide your employees with a digital or paper version of their P60. You need to make sure they receive their copy by May 31 of the fiscal year closing year.
Should Individual Owners Issue a P60 for Themselves?
As the sole owner, you technically don't pay a salary from the company yourself, you just have the profit left. Since you are not employed, you do not need to give yourself a P60.
How Can I Claim the P60 Tax Refund?
As the UK's leading tax refund service, we can help you claim a P60 tax refund and a tax refund on all expenses incurred as a result of your employment.
How to Fill Form P60 - A Step By Step Process
Completing your P60 form is an essential step in managing your taxes and ensuring you have all the necessary documentation for your financial records, tax returns, and benefit claims in the UK. This guide provides a comprehensive step-by-step approach to filling out the form, along with examples to clarify each section.
Employee Details
1. Surname and Forenames or Initials: Enter your full surname and either your full first names or initials. For example, if your name is John Michael Doe, you could write "Doe" as your surname and "John Michael" or "J.M." in the forenames section.
2. National Insurance Number and Works/Payroll Number: Your National Insurance number is unique to you and is used to track your tax contributions and benefits. An example format is "AB123456C". Your works or payroll number is specific to your employer's record-keeping system.
Pay and Income Tax Details
3. Pay: This includes your total pay from both previous and current employment within the tax year. If you earned £25,000 in the current job and £10,000 in a job earlier in the year, your total pay is £35,000.
4. Tax Deducted: Reflects the total amount of income tax deducted from your earnings. If £5,000 was deducted from your total pay, this is the figure you enter. Mark ‘R’ if you received a refund.
5. Total for Year and Final Tax Code: The total pay and tax deducted for the fiscal year, along with your final tax code. For example, if your tax code is 1250L, it means you have a tax-free personal allowance of £12,500.
National Insurance Contributions
6. Contributions: Detail your National Insurance contributions based on different earnings thresholds (LEL, PT, UEL). For instance, if you earned £20,000, and the LEL to PT range is £6,240 to £9,500, you'd calculate contributions on the amount above £9,500 up to £20,000.
Statutory Payments and Deductions
7. Statutory Payments: Include any statutory maternity, paternity, adoption, shared parental, or bereavement pay received. For example, if you received £1,400 in Statutory Maternity Pay, this is entered in the maternity section.
8. Student and Postgraduate Loan Deductions: If applicable, include the total amount deducted for student loan repayments. For example, if £600 was deducted for your student loan, you'd list this amount.
Employer Details
9. Employer's Full Name and Address: Provide the complete name and address of your employer. This is crucial for identification and records.
Certificate by Employer
This section is for your employer to fill out, certifying the accuracy of the information provided on the P60. It includes your total pay for income tax purposes and any additional payments like bonuses or statutory sick pay.
Practical Example
Let's say Emily Clark received a total pay of £28,000 this tax year. Her tax deducted was £4,200. She worked for ABC Ltd, with a final tax code of 1257L, indicating a slightly higher personal allowance due to deductible expenses. She had no student loan but received £1,000 in Statutory Maternity Pay. Emily would fill in her personal details, including her National Insurance number, the pay and tax details, and statutory pay received. Her employer, ABC Ltd, would then certify the form with their details and signature.
After filling up this form, you may need to use P60 Form Continous Sheet.
Filling out a P60 form is a systematic process that requires attention to detail and compliance with legal requirements. By following this step-by-step guide, employers can ensure that they accurately complete the P60, providing a vital record of an employee's earnings and deductions for the tax year.
Remember, the P60 is not just a piece of paper; it's a legal document that plays a significant role in an employee's financial life. Mistakes can lead to complications, so take the time to fill it out correctly. Utilize payroll software if available, as it can automate much of the process and reduce the risk of errors.
In conclusion, P60 is a document issued by an employer in the United Kingdom to their employees at the end of the tax year. It shows the total amount of pay received by the employee and the total amount of tax and National Insurance Contributions (NICs) that have been deducted. It's important for employees to retain their P60s, as they may be required to provide them to HM Revenue and Customs (HMRC) or other organizations in certain circumstances. Employers are required to issue P60s to their employees by the end of May following the end of the tax year.
How Can Tax Accountant Help You With Completing the P60
Tax accountants play a crucial role in the financial health and compliance of businesses and individuals in the UK. When it comes to completing the P60 form, which is a summary of an employee's pay and the tax deducted during the tax year, their expertise is invaluable. Here's how a tax accountant can assist with the P60 and more broadly with tax matters:
1. Ensuring Accuracy: Tax accountants are skilled in UK tax law and can ensure that all information on the P60 is accurate and compliant with current regulations. This reduces the risk of errors that could lead to penalties or additional scrutiny from HM Revenue and Customs (HMRC).
2. Maximizing Deductions and Allowances: They can advise on the various tax allowances and deductions available, ensuring you take full advantage of any tax-saving opportunities. This might include advice on charitable donations, pension contributions, or allowable business expenses that affect your tax code and ultimately the tax deducted as shown on the P60.
3. Dealing with Complex Situations: For those with complex employment situations, such as multiple jobs, being part of a pension scheme, or receiving benefits in kind, tax accountants can provide clarity and guidance on how these factors impact the final figures on the P60.
4. Tax Planning and Strategy: Beyond the P60, tax accountants can help with broader tax planning strategies to optimize your financial situation for the future. This includes planning for capital gains tax, inheritance tax, and making the most of tax-efficient savings and investments.
5. Liaising with HMRC: If there are any discrepancies or if HMRC queries any details on your P60, a tax accountant can communicate on your behalf. Their expertise can be crucial in resolving issues efficiently and effectively.
6. Education and Advice: Tax accountants can also educate you on the importance of the P60 for future tax returns, loan applications, and benefit claims. They can provide personalized advice based on your financial situation, helping you to understand how to use the information on your P60 to your advantage.
7. Support for Employers: For employers, tax accountants can assist in the correct preparation and issue of P60 forms to employees, ensuring compliance and minimizing the risk of payroll errors.
8. Navigating Changes in Tax Law: Tax laws and regulations change frequently. A tax accountant stays up-to-date with these changes, ensuring that your P60 and overall tax strategy remain compliant.
In summary, a tax accountant not only assists with the accurate completion of the P60 but also plays a pivotal role in broader financial planning and tax compliance. Their expertise can lead to significant savings, ensure compliance, and provide peace of mind when navigating the complexities of UK tax law. Whether you're an individual trying to understand your tax obligations or an employer ensuring accurate payroll reporting, a tax accountant can provide the guidance and support needed to manage your taxes effectively.
FAQs about Form P60
1. Q: What is the legal significance of a P60 form?
A: A P60 form is a legal statement of an employee's annual earnings and deductions, crucial for tax compliance and proof of income.
2. Q: Can I access my P60 form online?
A: Yes, employers can provide a digital version of your P60 form, which you can access online.
3. Q: What should I do if I find errors in my P60 form?
A: If you find errors in your P60, you should immediately inform your employer to get it corrected.
4. Q: Is the P60 form different for part-time and full-time employees?
A: No, the P60 form is the same for both part-time and full-time employees, reflecting their respective earnings and deductions.
5. Q: How is a P60 form useful for freelancers or contractors?
A: Freelancers or contractors may receive a P60 form from their clients if they are on their payroll, which is useful for tax purposes.
6. Q: Can a P60 form be amended once issued?
A: Yes, a P60 form can be amended if errors are discovered. The employer is responsible for issuing a corrected version.
7. Q: What information about my employment is not included in a P60?
A: A P60 does not include details like your employment history, job title, or hours worked; it focuses on pay and deductions.
8. Q: Is a P60 required for applying for state benefits?
A: Yes, a P60 may be required when applying for certain state benefits as proof of income.
9. Q: How long should I keep my P60 forms?
A: It's advisable to keep P60 forms for at least 22 months after the end of the tax year they relate to.
10. Q: Does a P60 include information on student loan repayments?
A: Yes, if you have made student loan repayments through your salary, this will be reflected in your P60.
11. Q: Can I use my P60 form for visa applications?
A: Yes, a P60 form can be used as proof of income in visa applications.
12. Q: What if I haven't received a P60 from a previous employer?
A: If you haven’t received a P60 from a previous employer, you should contact them to request it.
13. Q: Are there any penalties for employers who don’t issue P60s on time?
A: Employers may face penalties from HMRC for failing to issue P60s to their employees on time.
14. Q: How does a P60 form differ for employees with multiple jobs?
A: If you have multiple jobs, you'll receive a separate P60 from each employer, detailing the earnings and deductions from each job.
15. Q: What is the relationship between P60 and year-end tax adjustments?
A: The P60 form plays a crucial role in year-end tax adjustments as it summarizes your annual earnings and tax deductions.
16. Q: Can a P60 be used for credit applications?
A: Yes, a P60 can be used as proof of income for credit applications, such as credit cards or loans.
17. Q: Is a P60 relevant for child support calculations?
A: Yes, a P60 can be used to provide evidence of income for child support calculations.
18. Q: What impact does a change in tax code have on the P60?
A: Any change in your tax code during the year will be reflected in the tax calculations on your P60.
19. Q: Can a P60 affect my eligibility for government grants or subsidies?
A: Yes, as a proof of income, a P60 can affect your eligibility for certain government grants or subsidies.
20. Q: What role does a P60 play in retirement planning?
A: A P60 is important in retirement planning as it provides a record of your earnings, which can impact pension calculations.