If you’re employed in the UK, you’ve probably heard of a P60, but what exactly is it, and why is it important for your financial records? So a P60 is an end-of-year tax document that summarises an employee’s total pay and the tax deductions taken from that pay for the entire tax year, which runs from 6 April to 5 April of the year.
Purpose: It serves as official proof of your earnings and tax contributions for that year. It’s important for tax returns, applying for loans or mortgages, and claiming tax rebates.
Key Points of P60
- Issued by employers: You will receive your P60 form after the end of the tax year, which runs from 6th April to 5th April of the year.
- Includes important information: Your total earnings, National Insurance contributions, and any tax deducted from your salary are all detailed on the P60.
- Uses of a P60:
- Filing a tax return.
- Claiming a tax refund.
- Applying for tax credits or Universal Credit.
- Proving your income for mortgage or loan applications.
When Do You Receive a P60?
- Issue Date: Employers must provide employees with their P60 by the 31st of May each year.
- Who Receives It: If you were employed on the last day of the tax year (5 April), your employer will give you a P60. Self-employed individuals do not receive a P60, as they report income through a Self Assessment tax return.
What Should You Do with Your P60?
- Keep It Safe: It’s recommended to keep your P60 form for at least 3 years, as it may be needed for tax queries, future applications for tax refunds, or even to prove your income when applying for credit.
What If You Lose Your P60?
- Replacing a Lost P60: If you lose your P60, contact your employer as soon as possible to request a replacement. While employers are not legally required to provide a duplicate, many will issue a copy for your records.
How Does the P60 Differ from a P45?
- A P60 summarises your total pay and deductions for the tax year.
- A P45 is issued when you leave a job and provides details about your pay and deductions up until the point of leaving. It is needed to ensure proper tax calculation when starting a new job.
Why is the P60 Important for Tax Relief and Rebates?
- Claiming Tax Refunds: If you’ve overpaid tax, the P60 can help you apply for a tax refund from HMRC.
- Tax Credits: The P60 may be needed to apply for tax credits or benefits, as it proves your income for the year.
Final Thoughts
Whether for tax rebates or financial planning, the P60 form is a crucial document for all employees in the UK. Keep it safe and be sure to double-check the information for any mistakes. An accountant can be an invaluable partner, providing expertise to help you make the most of your tax and financial situation.