Recently received a P60?
- TBA
- May 15, 2024
- 4 min read
We’re now in a new tax year. If you were employed in the previous year, have you checked your P60?
When you apply for a mortgage, loan, or encounter any situation requiring proof of your tax records, if you cannot provide a P60, or you provide an incorrect one, you’re likely to face some trouble. It’s therefore vital that you check.
1. What is a P60?
Throughout the tax year, HMRC will closely monitor and record your statutory wages, tax payments, National Insurance, and any benefits you receive. The P60 form is a document that records this information and is issued as part of your annual tax settlement—it can be seen as a final tax receipt provided by the tax authorities when the tax year closes.
Employees generally receive the P60 document at the end of the tax year (early April). Your employer must provide you with the P60 by the 31st May of the following tax year at the latest.
If they haven’t done so by that date, you should request it from them. Alternatively, you can obtain your P60 information online by creating a personal tax account on HMRC.
If you changed jobs during the tax year, you will only receive the P60 from your current employer at the end of the tax year. If you resign after the end of that tax year, your former employer will give you a document called P45, which is similar to P60 and serves as a different form of tax receipt. The difference is that P45 is used to record your income and tax status for the year before leaving that job.
2. What personal details are included in the P60?
Generally, HMRC will issue a P60 template which is then filled out by the employer.
Regardless of who the employer is, the P60 form has the same format and includes the following information:
Payments made
Tax deductions
Employee NI contributions
Statutory deductions included in the salary, such as:
Statutory Maternity Pay (SMP)
Statutory Paternity Pay
Statutory Shared Parental Pay
Statutory Adoption Pay
Student Loan and Postgraduate Loan deductions
Tax code at the end of the tax year
Employee name
National Insurance number
Employer’s PAYE reference number
Employer’s name and address
3. Why do you need a P60?
The P60 serves as an annual statement of your tax. You therefore need to ensure that the information on it is accurate.
Living in the UK, it can be very helpful, for example, if you think you have paid too much tax, you can use the P60 to check. If you want to apply for a loan, you need it as proof of income. Or if you are applying for tax relief, the relevant department needs to use it to serve as financial proof of eligibility.
After receiving the P60, you should keep it as evidence of your income and tax status for at least four years. This way, for whatever reason, when you need to prove your tax identity to HMRC or need to resolve some issues, you will have enough evidence to address any problems and confirm your tax identity.
At the same time, employers also need to keep these records and retain copies for three years after issuing the employee’s P60.
4. If your P60 information is incorrect, what should you do?
After receiving the P60, you must carefully check every detail on it. If your details are incorrect, you can contact your employer or HMRC directly to correct the details. If it has already been submitted to HMRC, then you need to contact HMRC directly to correct your information.
If you believe you have paid more tax than you should have, and HMRC has not contacted you to inform you that you will receive a refund, you can submit a self-assessment form to claim these refunds.
We want to remind everyone that while HMRC may be able to automatically detect and correct some tax errors, correcting any issues with the P60 is usually the responsibility of the taxpayer themselves, so taking swift action to avoid any penalties is crucial.
5. Can self-employed individuals obtain a P60?
Since the P60 is issued by employers, if you are self-employed, you may not receive a P60.
If you need to provide four years of income for a mortgage application or other purposes, self-employed individuals can use the SA302 document, which you can download from the HMRC website 72 hours after submitting your tax return.
6. Guidelines for Employers
Employers must strictly comply with P60 form rules and must issue a P60 to each employee no later than the 31st May.
If you miss the deadline of May 31st, you may face fines. If the P60 remains outstanding, HMRC may impose an initial fine of nearly £300, plus daily interest fines of around £60.
Whether HMRC decides to impose fines typically depends on the reason for the initial delay in the form being issued. The longer the delay, the greater the likelihood of being fined. However, if the delay is due to updating or correcting errors, you can appeal to HMRC to cancel the fine.
7. How do employers issue P60s?
This depends on how your payroll is managed. If you have an accountant handling payroll, they are likely to be able to issue these forms for you. If you manage payroll yourself, then you are responsible for producing P60s.
You can distribute P60s in paper or electronic form according to your and your employees’ preferences. If you use accounting software, this is likely to help you issue P60s quickly and is a very efficient way to manage this task.
Companies with fewer than 10 employees can use HMRC’s Basic PAYE Tools, which is a free payroll software. HMRC’s software not only helps you generate P60s and other forms but also assists in calculating taxes and National Insurance contributions.
If you prefer using paper materials, you can order P60 forms from HMRC, but these forms may take several working days to arrive, so be sure to order them well before the May 31st deadline.