What is a P60?—Everything You Need to Know
A P60 form is an annual statement summarising the total taxable income and statutory deductions during the tax year covering the period from 6th April to 5th April of the following year.
Your employees should keep a copy of their P60 form, not just as a record of the amount of tax they have paid but also for reclaiming overpaid tax or national insurance, completing their self assessment return (if applicable), and applying for loans or a mortgage.
As an employer, it is important you understand P60 forms. Here’s everything you need to know about P60 forms:
- What is a P60 form?
- What does a P60 look like?
- Who issues P60?
- How to read a P60?
- When do P60 forms get issued?
- Lost P60, where and how to get a new one?
- Why is their P60 different to their salary?
- Incorrect P60, what you need to do?
What is a P60 form?
P60 summarises the year-to-date figures of an employee’s taxable pay and the total amount of tax and National Insurance paid for the year. The amount reflected on the form should match their figures reflected on their Month 12 payslip last payslip for the year).
Your employees will need a P60 for the following reasons:
- Filing a tax return
- Claiming tax credits/renewal of claim
- To check if their employer is using the correct National Insurance number and deducting the correct amount of National Insurance contributions
Once their P60 has been issued, they should keep a copy of the form as this will serve as proof especially if HMRC assesses them for paying too much tax or not paying enough tax. If you have high earning employees that could benefit from tax planning, we offer a free tax review. This will find out how much they could be saving.
What does a P60 form look like?
P60 is a sheet that includes the following information.
- Tax year
- Employee’s details
- National Insurance number
- Payroll number
- Total income from previous and current employer
- Tax deducted from income on both current and previous employer
- Final tax code
- National Insurance Contribution in current employment
- Statutory payments
- Student Loan Deduction
- Employer name and address
- Employer PAYE reference
- NIC letter
Who issues P60 form?
As the employer, you will issue the P60 to your employee if they are still employed by you on the last day of the tax year. They do not have request a P60. You are obligated to automatically send the P60 either via paper or electronic form.
If you are paid a salary via PAYE in your company you should also generate your own P60 at the end of the tax year.
How to read a P60 form?
Both you the employer and your employees are responsible for ensuring all the information reflected on the P60 is correct and up to date.
Employers should review each P60 before distributing the forms to the employees. This is the key information worth checking::
- Employer information- which includes the employer’s name, address and PAYE reference
- Employee information- which includes name, NI number, address, and NIC letter
- Total payments, total tax, and National Insurance contributions – figures should match employee’s last payslip
- Other information – such as student loan deduction and any statutory payments
When do P60 forms get issued?
Employers may start issuing the P60 to their employees once the final payment of the year has been completed but the deadline of P60 issuance is on the 31st of May.
You can generate them directly from your payroll software. Alternatively, contact your payroll provider to give the copies to you and your employees.
Lost P60, where and how to get a new one?
If your employee loses their P60 they may request another copy from you. You must help with that request if the employee has been an employee of yours in the last 3 years. However, after 3 years of an employee can ask for a statement detailing their annual income and taxes. However, they can speak to HMRC, so if you are unsure direct them there.
Why is my P60 different to my salary?
If you are paid a salary via PAYE in your company you may notice your P60 doesn’t match your salary. Your P60 shows your annual “taxable income” and not your gross income. There are some payments that are non-taxable and therefore will not be included in your P60 figures. If you are in a pension scheme, the total amount of pension contributed throughout the year will also be deducted from your total income.
Incorrect P60, what you need to do?
You should review the P60s to ensure all the employment data is correct. This is the responsibility for both employees and employers. If you are a sole trader you are responsible for checking your employment data.. In case of error, you as the employer will need to produce a new P60 marked as “replacement” via paper or electronic form and send a letter to the employee detailing the changes made.
P60 is a summary of all the taxable income received as well as all the statutory deductions that have been taken off. Basically, it’s proof of all the taxes you have paid in the tax year. This form is often required when you or your employees want to apply for a mortgage, loans, property rental, and other services.
Employees are entitled to a P60 if they are still employed by your company until the 5th April of the following year. You, the employer, have the responsibility to issue, review and correct all your employees’ P60.