Everything employers need to know about P60s

What is a P60?

It is the employer's responsibility to ensure their staff are fully aware of their contributions and payments, which is why it is so crucial for employers to understand the information contained in a P60 and how it may affect their employees.

Read on to make sure your P60s are sent out promptly and include all the essential details, enabling all of your employees to understand their exact tax position.

A P60 holds significant importance and offers a detailed statement of income earned, Taxes Deducted at Source (TDS), and National Insurance Contributions an employee has received from their employer in a tax year.

It's essentially a 'year-end certificate' providing proof of employment and their yearly tax payments.

If your staff ever need to claim back overpaid taxes, apply for tax credits, or prove their income to secure a loan or mortgage, they will need to submit their P60.

It's important to remember employees must be issued a P60 for each employer they have worked for during a tax year. 

What happens if the deadline is missed?

Companies should be aware of the P60 submission cutoff date; the HMRC may take action if they fail to meet it.

The action taken varies from a warning letter to an expensive financial charge, depending on the seriousness of the case.

Businesses who do not respect the deadline could be subjected to costly fines, including a starting fine of £300 for late release, which can be followed by a £60 fee per day until the P60 is issued.

What information must be included on a P60?

A P60 document must have the following elements:

• Employee details (name, address and PAYE reference number)
• Tax code, the corresponding tax year (e.g. 2023/24)
• All taxable earnings earned in the current tax year along with taxes paid to the current and previous employers in that year
• National insurance contributions made between April 6th and April 5th
• Any statutory payments received such as maternity, paternity or shared parental pay
• Deductions from a student loan or postgraduate loan payments

P60s do not show pension contributions; employees should also keep their last payslips for record-keeping purposes.

How can employers update the information on a P60?

If you discover an error or are notified of an inaccuracy on a P60, you must correct the wrong end-of-year certificate.

Employers must notify HMRC of any Corrections using form P35 and return the amended P60 to the employee. This must be done within 30 days.

Complete guidance on updating the information on a P60 is available from HMRC.

Once the correction is completed and an employer is assured of its accuracy, they can receive a replacement P60 digitally or in paper form.

Alternatively, you may send a letter confirming these changes have been made to rectify any discrepancies.

Difference between a P60 and a P45

There are several essential documents that employees must be provided when they leave or join a company, or at the end of the tax year.

Two of these are the P60 and P45, which are often confused, but there are differences between the two.

A P45 is issued by an employer to their new employer (the employee should keep a copy) when the employee leaves a role.

The P45 states their pay and tax deductions up until that point in the tax year at the last payroll date before they left.

A current employer issues a P60 at the end of each tax year (meaning employees can have more than one P60 if employed in several organisations).

The P60 summarises the income earned from all sources and the total amount of National Insurance and Income tax deductions taken in that period for the current job only.

In conclusion

At the end of every year, employers must issue P60 documents to their employees. 

This document outlines the total income earned, National Insurance, and Income Tax deductions taken during the respective period.

It is up to employers to make sure the P60s are created and kept up-to-date.

An employer must issue a p60 to all their employees by 31st May following the tax year too. They must also keep a record of the document for at least three years in case of an HMRC inquiry.

Employers must also ensure a P60 is provided to any employee who left the organisation during the year for tax return purposes.

To guarantee P60 accuracy, employers should keep their employees in the loop on when their P60s are issued and how they can access them, in addition to updating employee records frequently.

The P60 is separate from the P45 document, which should be given to employees upon departure.

Have a look at our frequently asked questions about P60s here.