P60 Explained

A P60 is a form used by HMRC. A P60 is issued at the end of each tax year. A P60 contains exact information about how much you have earned PAYE (Paye As You Earn) and NIC's (National Insurance Contributions) you have paid during the specified tax year. It is your responsability to check your P60 and claim back any overpaid tax or report underpaid tax.

30 second introduction to P60

How the P60 works

A P60 (End of Year Certificate) is an annual statement issued to taxpayers at the end of each tax year that the employee works for an employer. You should never destroy your P60 as it is a vital part of the proof that tax has been paid.

A P60 is actually one part of a three part tax form call a P14 (End of Year Summary). the P14 comes in three parts

  • P14 Part 1: Part one of the p14 is for HMRC and is sent to the Contributions Office.
  • P14 Part 2: Pat two of the P14 is retained by the tax office where your employers PAYE scheme is registered
  • P14 Part 3: Part three is the P60 that we all know and love!

P60 Facts

  1. A P60 is an 'End of Year Certificate'.
  2. If you are working as a PAYE employee (normal worker) on 5th April each year your employer must give you a P60.
  3. A P60 defines exactly what HMRC know and belive your should have paid in tax and National Insurance.
  4. If your P60 is incorrect, it is up to you to rectify the error.
  5. You will typically be asked to provide a copy of your P60 when applying for a mortgage, property rental or other financial service.
  6. You should never destroy your P60! Your P60 is proof that you have paid your tax. HMRC have superb technology these days but they frequently make mistakes and will bill you unwittingly when they make a mistake. HMRC tax systems are automated and will create and issue letters without human interaction. Errors can quickly amplify into fines so keep your P60 as proof.
  7. If you are an employer, you must provide a form P60 to each employee who is working for you at the end of the tax year. You should also have completed a P11.

P60 in detail

Well, that the P60 explained in 30 seconds, well, maybe a little longer. If you want to know more about P60's, your responsability as an employee / employer and who to contact for a tax rebate if you think you have paid too much tax read our guide: P60 Explained in detail

Next: P60 Checklist 2019

Previous: Introduction to 2019 P60

PAYE Forms Explained: Know More about P45, P46, P60 Today

While in employment, it is quite likely you would have come across a lot of forms and paperwork at some point or another - most of which you may not necessarily understand completely. From your contract to your pay slip, there is a lot of information to get your head around. One such piece of information is PAYE forms. It is important to gain a good insight into what these forms mean, as well as learning the difference between a P45 and a P60.

PAYE Forms

Pay as You Earn, or PAYE as it is more commonly known, is a method used to pay income tax and National Insurance on your wages. If your wages are calculated using PAYE, your employer will work out how much tax and National Insurance will need to be deducted before you are paid. As part of the PAYE system, tax and National Insurance is paid each time you receive your wages, as opposed to having to pay it all in one lump sum at the end of the tax year. Here is a brief guide to each of the different PAYE forms you will likely come across during your employment:

P45

If you have ever left a job, you may have received a P45 at the end of your employment. This is a four-part form which you will receive from an employer when you no longer work for them. A P45 outlines how much tax has been paid since the start of the tax year - this runs from 6th April to 5th April. Your P45 should also contain your tax code number (which you can also find on a copy of your payslip), as well as total earnings for the year to date, and a breakdown of how much tax and National Insurance has been deducted for the year so far.

When you receive your P45, you will notice it comes in four parts. The first part will be given to HMRC by your employer, while Part 1A is given to you for your records. Parts two and three are for you to give to your new employer to allow them to work out your tax code.

By law, your employer must give you a copy of your P45 at the end of your employment. If you happen to lose your P45, your employer cannot give you a replacement. Instead, your new employer will provide you with a Starter Checklist.

P46

If you lose your P45, you might be given a P46 or a Starter Checklist by your new employer to help them determine your tax code. Most employers do not use P46 forms anymore, and will often opt for a Starter Checklist instead. This checklist contains a list of questions regarding information such as any other jobs you may have, or any benefits or student loans you might receive.

P60

While a P45 or a P46 is provided either at the end of your current employment or start of a new one, a P60 is provided while you're still currently employed. A P60 is essentially a summary of the tax you have paid for the year. If you have more than one job, you will receive a P60 for each job you hold.

As the tax year ends on the 5th April, your employer must supply you with a P60 if you're in employment on this date. The latest they can provide you with a copy of your P60 is the 31st May - this can be in either paper format, or electronically.

It is important that you keep your P60 safe for a number of reasons including self assessment tax returns. The most notable is that your P60 contains plenty of personal information which you're unlikely to want others to know. It is also important that you keep your P60 safe as it will help you to claim back any overpaid tax, and also to help when applying for tax credits. Your P60 can also act as proof of income should you decide to apply for a loan or a mortgage. If you lose your P60, you can quite simply ask your employer for a replacement.

P60 2019: Guides and Tools

iCalculator's P60 Guides and P60 Calculators include detailed information and guidance to help you understand your P60, identify key parts of the P60, explain how your P60 is calculated and what information you need to know and understand about a P60 as an employee and employer. Our aim with the P60 guides is to provide insight into the correct completion of a P60, whether it be an audit as an employer to ensure your end of year certificates are calculating correctly or as an employee to check that you have paid the right amount of income tax and, if not, how to claim any overpaid tax back.