P60 form is the essential document for anyone earned income in the UK. Provided by the employer; A statement of an employee’s total wages and other benefits for the tax year starting 6 April and ending 5 April the following year coupled with the tax already paid. 

Certain purposes of the P60 form, types of information disclosed in it and its significance for both personal and taxation management is crucial for any UK taxpayer.

This blog will seek to explain what the P60 form is, for whom it should be issued, contents of the form and what to do in case of mistakes or loss of the form.

What is a P60 Form?

The P60 form is used as a summary of an employee’s taxable income and tax paid for one fiscal year. It is especially important when it comes to perceived income and taxes and it is usually obligatory when it comes to such things as loans or mortgages as well as tax refunds.

Issued by employers, the P60 confirms:

• Gross pay for tax year from primary and/or secondary source of employment.
• Income tax and National Insurance have been earcashed out.
• Other exemptions from total remuneration or requirements under statute law

When and Why Do You Receive a P60?

Employees who are in employment on 5 April, the end of the tax year, receive a P60. This form has to be provided by employers no later than 31 May. It can be done in paper form or in the employer’s electronic system, depending on the choice of the latter.

Every employer for whom you worked during the tax year must issue you with a P60 tax certificate.

The P60 functions as:

• Evidence of taxable income and tax deduction: This is a tax document of official records scheduling individual tax affairs and business for financial purposes.
• Document for Refund of Tax: This is used if you think that you have paid excess tax; the form is complete with requirements that one needs for a tax reimbursement.
• Proof for Financial Applications: Banks, landlords, and even lenders may require you to attach your P60 to proof of income.

Who Should Get a P60?

• Employee: If an employee is on the payroll at the end of the financial year, he/she should be receiving a P60 from the employer.

• Sole Proprietors with Employees: Sole proprietors will not have a P60 personally, but will have to issue one to their employees.

• Contractors under an Umbrella Company: Those who work through umbrella companies will be issued a P60 from an umbrella organization.

What Information Does a P60 Contain?

Includes coverage for the following components that a P60 summarizes:

Personal and Employer Information:

• Your name, address, National Insurance number, and payroll number 
• Employer's name and address

Income and Tax Information:

• Total earnings from employment in the tax year 
• Income tax deducted via the Pay As You Earn (PAYE) system

National Insurance Contributions (NICs):

• Contributions made, including detailed breakdowns for various thresholds like the Lower Earnings Limit (LEL) and Upper Earnings Limit (UEL).

Statutory Payments:

• Employee statutory payments, such as maternity, paternity, adoption, and sick pay.

Other Deductions:

• Student loan and postgraduate loan deductions.

Final Pay and Tax Summary:

• End of year summaries for your pay and deductions in taxes.

Why is a P60 Important?

P60 - essential because crucial in managing finances and taxes, here is why:

Facilitates Tax Validation

• Your P60 will enable you to validate whether the right amount of tax has been deducted from your income. Use it for cross-checking overpayment and underpayment of Income Tax.

Reclaiming Tax Payments

• Where you have overpaid tax during the year, the P60 will be an important document when making a claim for tax refund.

Financial Applications

• Lenders or landlords may request your P60 in making your application for a mortgage, loan or rental, as proof of your income and tax compliance.

Filing Tax Returns

• The figures reported on your P60 are the key figures used to accurately report your income and tax for the purposes of a Self Assessment tax return.

National Insurance Contributions

• Summarises your NIC, which are needed to determine whether you qualify for benefits like the State Pension or maternity pay.

Employment Verification

• Some organisations may ask for a P60 to prove employment in a particular tax year. 

Avoidance of Mistakes

• The P60 helps identify inaccuracies in your tax code, personal identifiers or contributions. This can, therefore, be rectified early enough to prevent future problems.

What to Do If You Lose Your P60

To lose your P60 may be disadvantageous, but here are some measures that you can take to get it. Making contact with your employer: Request a replacement from your employer's HR or payroll department. 

Validation of Tax

• Your P60 shall let you know if your tax amount has been rightfully deducted from your income. Use it for cross-checking over.

Access Online Payroll Systems:

• Meanwhile, several employers permit digital access to tax documents. Check with your online employee portal for a download copy.

Reach Out to HMRC:

• If your employer is unable to replace it (e.g., out of business), HMRC could provide the information on your P60.

Use Other Documents:

• Your last payslip for the tax year might serve as a temporary replacement while you wait for a new one.

Frequently Asked Questions (FAQs)

1. What should I do if my P60 contains errors?

Inform your employer or pension provider immediately. They're responsible for amending the errors and issuing a revised P60.

2. Do self-employed individuals receive a P60?

Self-employed people do not get a P60. They use a Self Assessment tax return to declare their income and taxes. 

3. Can I get a P60 from previous years?

Yes, contact your employer or HMRC for copies. Replacement P60s can be issued by HMRC for up to six years. 

4. What if I work multiple jobs?

In such cases, you shall receive a P60 for each different employer, which summarizes earnings and tax contributions from that employment. 

5. How do I store my P60 safely?

Keep them together with digital copies in a secure place. They may be needed in future tax returns and financial applications. 

A P60 form is a key document for an employee in the UK, and it provides complete information about earnings, tax payments, and contributions over a tax year. It forms a key part of an individual's personal finance management, whether it be for claiming tax rebates, applying for loans, or verification of employment details. 

An employee needs an employer to be able to deliver a correct P60 form on time, as soon as the process is complete. Personal understanding of the contents and purpose of a P60 will ensure you are informed and thus compliant with your tax 

The TVR accountants are here if you want to pay excellent payroll management services or tax-related services. Our team provides streamlined, compliant, and stress-free payroll assistance. Contact us today for professional support.