As an employer running payroll, you have various year-end obligations, from sending your final payroll report to HMRC to giving each of your employees a P60.
In this guide, we explain the rules relating to P60s, including what these are, who needs to be given one and when, how to issue a P60, what information they must show and how any changes can be made.
What is a P60?
A P60 is a certificate containing information as to how much Income Tax and National Insurance contributions the employee has paid on their salary through PAYE over the course of the tax year to which it applies.
It is an end-of-year certificate that essentially summarises details of the employee’s total pay and deductions for the year, from 6 April to 5 April. The total pay includes any overtime, bonus and commission etc. It will also include any statutory payments, such as statutory sick pay, and statutory maternity or paternity pay.
P60s are issued by employers to employees for their own personal records. The employee may need this information as proof of income or to prove how much tax they’ve paid, for example, to apply for a mortgage or loan, to apply for tax credits, to claim back any overpaid tax or to complete any self-assessment return for other taxable income. When filing a self-assessment return, the law requires employees to keep a record of their taxable income, including their P60, for at least 22 months after the end of the tax year to which the return relates.
The P60 will also help the employee check that the correct National Insurance (NI) number is being used, and the right NI contribution rate is being deducted from their salary.
Who needs a P60?
As an employer, you must ensure that each employee who is on your payroll and was working for you on 5 April, so on the last day of the tax year, is given a P60. By law, employers must give a P60 to each employee working for them as of this date, and for whom they have completed a P11 Deductions Working Sheet or a Full Payment Submission (FPS). The FPS is the document that employers need to submit to HMRC every time they pay their employees.
An employer should not issue P60s for any employees who are no longer working for them at 5 April. This is because you’re not required to issue a P60 to an employee who has left your business during the tax year, as all the necessary pay and tax information would’ve already been included in their P45. This is the form issued to an employee when they leave a job.
You should also only give one P60 to each employee on your payroll, even if that individual has worked for you more than once during the tax year. However, an employee is entitled to a separate P60 for each job they have with different employers. This means that at the tax year end, if an employee has two current jobs, for two different employers, they should be issued with separate P60s for each of these.
If you’re a limited company director and draw a salary from your business, you’ll need to issue a P60 to yourself. Your accountant should do this for you. Sole traders don’t draw a salary and are not employees of their own business, so they don’t need to issue themselves a P60.
When do you issue a P60?
A P60 must be given to each employee working for you on 5 April by 31 May. A P60 is issued annually, and no earlier than the end of the tax year, but no later than the end of May. Ideally, you should give employees their P60 on 6 April, or as close to this date as possible.
The P60 can be issued in either paper format or electronically. As a single sheet form, many employers still issue hard copies to hand to their employees, although paper P60s can be easier for employees to misplace. That said, if you issue a paper-based P60 and an employee loses this, you can provide them with a duplicate. As part of your payroll record keeping obligations, you must keep copies of P60s that you issue to employees for a period of 3 years, although you’re not required to send copies of P60s to HMRC. It’s simply a form prepared and issued by you as the employer, to give to each of your employees at the end of the tax year.
If you no longer have a copy of an employee’s P60 and they need a replacement, you can instead provide an employee with what’s known as a ‘Statement of Earnings’ on company headed paper. This should detail the same information as a P60 and can be used by the employee to claim a tax refund, or as proof of income, in much the same way as a P60.
An employee can also view or print the information that would be on their P60 by accessing their personal tax account or, alternatively, they can contact HMRC and ask for the information. HMRC are not, however, able to issue copies of P60’s.
How do you issue a P60?
You can use your payroll software to issue a P60, and to securely share this form online with your employees. There should also be an option to print P60s off if necessary, so you can provide your employees with a paper copy. If you need more information about producing P60s, you should check your payroll software provider’s website or contact them directly.
If your payroll software cannot produce P60 forms, and your business has fewer than 10 employees, you can use HMRC’s Basic PAYE Tools. This is free payroll software that can be used to perform various payroll tasks, including calculating the tax and National Insurance for your employees, and generating P60s and other payroll forms.
If your software cannot generate a P60, or you’re exempt from filing your payroll online, you’ll need to contact HMRC to order P60 forms. Only a limited number of employers are exempt from filing online, for example, if you’re employing someone that’s providing care or support services at or from your own home, or where you have a disability preventing you from using a computer or you’re unable to access any internet connection.
You can apply to become exempt from filing online if you’re a care and support employer or there are exceptional circumstances. You’ll need to write to HMRC with full details of why you think you may be exempt for your application to be considered.
What information should a P60 show?
A P60 will require you to complete the following information:
- the employee’s full name
- the employee’s National Insurance number
- the employee’s works or payroll number
- the employee’s pay and income tax details, including gross pay received and tax deducted in any previous employment during the tax year, plus gross pay received and tax deducted in their current employment, with the total gross pay and tax deducted for the relevant year
- the employee’s tax code
- the employee’s National Insurance contributions paid for their current employment
- any statutory payments included in the employee’s pay in their current employment, such as statutory sick pay, maternity pay, paternity pay, shared parental pay, adoption pay and parental bereavement pay
- any student loan deductions in the employee’s current employment
- any postgraduate loan deductions in the employee’s current employment
- the full name and address of your business
- the PAYE reference for your business
In the “Pay and Income Tax details” section of the P60, there’s provision for three rows of figures. The middle row should show an employee’s pay and the tax deducted in their current employment. Above this is provision to include any pay and tax that you, as the current employer, are aware of from any previous employment. The bottom row is the total for the tax year. If the employee joined your business part way through the tax year, the P60 should show any taxable earnings and tax paid while in your employment, together with any pay and tax from their last job. However, you’ll only be able to complete the top section if the employee has provided you with a P45, containing details of their earnings from their previous employment, or if HMRC has sent you a tax coding notice that includes these figures.
If the employee worked for another employer for part of the tax year, the P60 will only show National Insurance contributions paid in the employee’s current job, as any P45 provided by the employee from any previous employment will not provide details of any NI deductions.
Penalties for failing to issue a P60
Employers are legally obligated to provide a P60, where any failure to do so could result in a financial penalty. This means that if you’ve missed the P60 deadline, you must ensure that you give an employee their P60 as soon as possible. The longer you delay, the more likely it is that you’ll be fined. You must also ensure that the information contained in a P60 is accurate.
Employers who refuse or fail to issue a P60 by the deadline date could face hefty fines from HMRC. The initial penalty for late issuing is the sum of £300, followed by an additional fine of £60 per day for each day that you fail to issue the P60 to the employee in question. However, the imposition of a fine may often depend on the reasons for any delay. If it’s a genuine error, and you take steps to issue the P60 as soon as possible, a fine is less likely to be imposed.
Making changes to a P60
Submitting P60s on time and accurately is entirely the responsibility of the employer. However, there are several important variables for employer’s to remember and so plenty of potential for error. This means that mistakes can and do happen, especially if an employer’s HR and payroll systems don’t integrate well together.
If you need to amend a P60 for any reason once it’s been issued, you can make the necessary amendment and provide your employee with a new form. However, the new P60 must be clearly marked ‘replacement’. As with the original P60, a replacement can be issued in either paper format or electronically. Alternatively, you can issue your employee with a letter, providing written confirmation of the amendment made to their year-end certificate.
How does a P60 differ to a P45?
There are a number of key differences between these two types of payroll forms, although both the P60 and the P45 forms are important documents that employers are legally required to give to their employees, depending on the circumstances involved.
The P60 is used to summarise the employee’s pay and tax information at the end of the tax year, while the P45 shows how much tax an employee has paid on their salary for the tax year to date when they leave their job. This means that the P45 will only contain information as to the employee’s earnings and tax payments for the tax year up to the date of termination, whereas the P60 will show pay and tax information for the whole of the tax year.
The P45 is essentially information as at final payroll date. The P60 is information as at 5 April. Unlike the P45, the P60 will also provide a summary of the National Insurance contributions made on the employee’s earnings, albeit only for the employee’s current employment.
Both the P45 and P60 are important documents for proving pay received and tax paid, and should therefore be retained by the employer and the employee.
P60 payroll guide FAQs
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Legal disclaimer
The matters contained in this article are intended to be for general information purposes only. This article does not constitute legal or financial advice, nor is it a complete or authoritative statement of the law or tax rules and should not be treated as such.
Whilst every effort is made to ensure that the information is correct, no warranty, express or implied, is given as to its accuracy and no liability is accepted for any error or omission.
Before acting on any of the information contained herein, expert professional advice should be sought.
Author
Gill Laing is a qualified Legal Researcher & Analyst with niche specialisms in Law, Tax, Human Resources, Immigration & Employment Law.
Gill is a Multiple Business Owner and the Managing Director of Prof Services Limited - a Marketing & Content Agency for the Professional Services Sector.
