What is a P60?
A P60 form is a certificate issued annually by employers to employees detailing the total annual earned income and taxes paid between 6 April of one year to 5 April of the following year. The summary of the taxes included in the P60 contains the PAYE (Pay As You Earn) income tax and the National Insurance Contributions (NICs).
Because the P60 summarises annual pay and tax information, accuracy plays an important role. Individuals may use the form for various personal or financial processes, such as loan or mortgage applications. It is used for a variety of purposes including loans and mortgage applications, tax rebates and self-assessment tax returns.
Many organisations keep copies of employees’ P60s for several years in case they need to reference past records or respond to HMRC requests.
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Importance of the P60
The P60 is important as it serves as the key document to verify income and associated tax contributions. It affects employees and employers in the following ways:
- For employees: The P60 provides employees with a detailed overview of their annual earnings and taxes paid. They will need it to fill in tax returns or apply for a loan or a mortgage. It is also useful for managing personal finances.
- For employers: Employers are expected to provide P60 forms and typically handle them at the end of the tax year. Understanding the process can help them manage timing and accuracy effectively.
Becoming familiar with the P60 can support employers in managing records in line with HMRC requirements.
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What employers need to know
Because employers generally handle P60 distribution, understanding the usual procedures and time frames can be helpful. They also need to be aware of any penalties resulting from failing to issue a P60. The following section outlines common considerations that employers may review when working with P60 forms:
Information to include on a P60
A P60 generally contains key information such as annual earnings, tax deductions and identifying details. Common elements include:
- Employee’s full name: ensures personal identification
- National Insurance number: used for tracking the employee‘s tax and benefits records
- Unique employee payroll number: a specific identifier within the employer’s payroll system
- Employee tax code: determines the amount of tax to be deducted from the gross pay
- Gross annual pay: the total earnings of the employee during the tax year before any deductions
- National Insurance contributions: made by the employee, affecting entitlements to certain benefits
- Student loan deductions: if applicable, shows deductions made for student loan repayments during the current employment
- Statutory payments: includes details of any statutory payments such as sick pay, maternity pay, etc.
- PAYE reference: identifies the employer‘s record with HM Revenue and Customs
- Name of the organisation and legal address: official details of the employer
Related: A guide to HR compliance with checklists and examples
Whom to issue a P60 to
Employers typically provide a P60 to employees who are on the payroll at the end of the tax year. This usually includes individuals who have been on PAYE submissions throughout the year, even if they worked under different contracts. Employees who have been on PAYE submissions throughout the year generally receive a single P60 summarising that period, even if they worked under different contracts.
Businesses generally only provide a P60 to individuals who are still employed on 5 April. This applies even if the individual in question has not moved to another employer.
Sole traders who do not draw a salary do not need a P60; however, directors of limited companies who receive a salary do need a P60.
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P60 deadlines
P60s are typically provided between 5 April and 31 May, the period that follows the close of the tax year. Many organisations plan their internal processes around this window to manage distribution efficiently. It is not possible to issue the P60 prior to the end of the financial year as the financial details have yet to be finalised, which could lead to inaccuracies.
The specific timing of P60 distribution can vary based on an employer’s internal processes, but employers usually work within this period to keep processes aligned with the tax-year schedule. This window can be a busy period for payroll and HR teams, so some organisations plan ahead to help manage their internal timelines.
Related: A guide to HR compliance with checklists and examples
How to issue a P60
The process for issuing a P60 will depend on how your business manages payroll. Depending on the company’s payroll setup, an accountant may handle the issuing of P60s. Some employers choose to distribute the forms internally, either in paper or electronic format. Digital versions can be emailed directly to employees, and many organisations choose to secure them with password protection or other safeguards.
Some organisations use accounting software that includes P60 creation features. HMRC’s Basic PAYE Tools is one example of software suitable for smaller businesses. Those who prefer paper format can still obtain them directly from HMRC and distribute them by post.
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Penalties for failure to issue a P60
HMRC outlines potential penalties for missing P60 deadlines or submitting incorrect information. Current guidance notes an initial fine, with additional daily charges if the delay continues.
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The P60 form is an essential part of the tax system in the United Kingdom. Employers typically handle issuing P60s at year-end, and having clear processes in place can support accurate, timely distribution. Some organisations choose to use payroll software to streamline internal processes and support organised record-keeping.
Related: What are automated workflows and how can they be used in HR?
