25/10/2024
What is a P60?
A P60 summarises the total earnings and tax deductions of an individual for the entire tax year, which runs from April 6th to April 5th of the following year. It is an important tax document issued by employers to their employees in the United Kingdom at the end of each tax year, with a deadline of 31st May.
What information is shown on a P60?
- Personal Information: The P60 contains the employee’s personal details, including their full name, National Insurance (NI) number, and payroll number. This information ensures that the document is uniquely tied to the individual employee.
- Income Details: The P60 summarises the employee’s total earnings for the tax year. This includes all income from their job, which includes salary or wages, bonuses, and any other taxable benefits processed through payroll by their employer.
- Tax and National Insurance Contributions: The P60 outlines the total amount of Income Tax and National Insurance contributions that have been deducted from the employee’s earnings throughout the year. These figures are crucial for ensuring that the correct amount of tax has been paid.
- Other Deductions: The P60 also details student loan and Postgraduate loan repayments. These are deducted at source by the employer and are reflected in the P60.
- Previous Employment: If the employee changed jobs during the tax year, the P60 might include income and tax details from the previous employment, provided the new employer received either a P45 from the employee’s previous job or previous pay and tax details from HMRC.
Why is the P60 Important?
The P60 is a crucial document for several reasons:
- Tax Returns and Rebates: If you need to complete a self-assessment tax return, the P60 provides the necessary information on your earnings and tax paid. It’s also essential if you believe you’ve overpaid tax and want to claim a refund.
- Proof of Income: The P60 serves as official proof of income. This is often required when applying for loans, mortgages, or other forms of credit, as lenders need to verify your earnings.
- State Benefits: When claiming certain state benefits, such as Universal Credit, the P60 can be used to prove your income and tax contributions, which may affect your eligibility for certain benefits.
How to Obtain a P60
Employers are legally required to provide a P60 to every employee who is on their payroll at the end of the tax year. This document can be issued either in paper form or electronically, depending on the employer’s preference. If you do not receive your P60, you should contact your employer’s payroll department as they are obliged to provide it by 31st May. Additionally, you can go to the HMRC website and use your personal tax account for the information your P60 would contain.
What to Do with Your P60
Once you receive your P60, it’s essential to keep it safe. You should retain your P60 for at least 22 months from the end of the tax year, though many people choose to keep it longer for their records. This is important in case you need to reference it for tax purposes or financial applications.
Conclusion
The P60 is a vital document that summarises your earnings and tax deductions for the year. It plays a key role in financial planning, tax returns, and applications for credit or benefits. Understanding the details within your P60 helps ensure that you are on top of your financial obligations and entitlements. Here at HWB Accountants we can help you with your payroll and support you with your employer obligations.
Need help with your Payroll? Contact James Alesbury at HWB Accountants on james.alesbury@hwb-accountants.com or 023 8046 1222