One of the important documents for employees that is generated at the end of the financial year in April is the P60. But we know that it’s easy to just file it without being really sure what it’s all about so this month, we’re going to decode your P60.

What is a P60?

P60 is actually just the name of the HMRC document; its full name is the End of Year Certificate. It is a summary of all the tax and NI that’s an employee as paid, as well as any statutory payments that might have been received.

An employee will receive a P60 for every job they have so for example, if someone has two part time jobs, they will receive two P60s and the amounts will need to be added together to get the full picture of all the deductions and payments in the tax year.

If an employee has changed jobs in the tax year, they will only receive one P60 and the amounts from the previous job will be recorded on the P60 in the ‘in previous employment’ boxes.

There are a couple of key dates for P60s each year. The first is 5th April – all employees on the payroll on this date are due a P60. The second is 31st May – this is the date by when those P60s should be done. Even if an employee moves to a new employer during April, their old employer will still need to give them their P60.

Why is it so important?

A P60 actually contains quite a lot of information that will be important elsewhere. If an employee needs to claim Universal Credit or apply for or renew tax credits, a P60 will be an important piece of paperwork that will need to be submitted.

If anyone applies for a refund of overpaid tax, a P60 is needed for that process too.

Similarly, if an employee is applying for a mortgage or a loan, a P60 can be used as proof of income although mortgage companies will generally require additional evidence such as payslips and copies of bank statements. 

It also allows the employee to check that their employer holds their details, such as NI number and tax code correctly so they are being deducted the correct amounts and those deductions are being applied to the correct account.

What about the self-employed?

If someone is entirely self-employed and doesn’t receive any income from working for someone else and being on their PAYE system, they won’t receive a P60.

But if someone does have paid employment, however small, they’ll receive a P60 and those amounts will need to be recorded on their self-assessment tax return for that tax year. If the tax return is done online and the NI number is recorded correctly, the employee will find their personal tax account will have been automatically updated with the P60 amounts.

What to do if an employee doesn’t have a P60?

If an employee hasn’t received a P60 by the end of May, they should ask their employer to provide one. But if that doesn’t happen, the same information that would be on the P60 can be found on their personal tax account and the details can be printed off from here if required.

Because we at Pixie Payroll work on high standard payroll software, the P60s for our clients are generated automatically and very soon after the end of the tax year. But if you need any help getting them done for your employees, just get in touch.