Tax Advice

What Is a P60 Form or ‘End of Year Certificate’ in the U.K.?

As part of the PAYE scheme, all U.K. employees must get a P60 at the end of each tax year. This ‘End of Year Certificate’ is a summary of all their pay and total tax deductions for that tax year.

But what does this mean for you as an employer?

Don’t Worry, a P60 Isn’t a Big Job!

All employers must issue an annual P60 to all their employees by 31 May after the end of the tax year.

For example, your employees must have their P60 for the financial year (6 April 2023 to 5 April 2024) by 31 May 2024.

There are 3 ways to handle your P60 admin:

1. Your payroll software can automatically generate P60s for you, saving you hours of paperwork. Synching compatible payroll software with your FreshBooks account makes things even easier.
2. You can use HMRC’s free payroll software, Basic PAYE Tools (BPT), as long as you have no more than 10 employees.
3. If you’re exempt from online filing, you can order paper P60 forms from HMRC to fill out manually. You need to allow at least 7 days for these to arrive through the post, so don’t leave it until 30 May to make an order.

Or you can instruct your accountant to sort it out for you, of course.

It’s reassuring to know that you’re only responsible for issuing a P60 based on the work that the employee has done for you. If they have more than one job, they’ll get a P60 from each different employer. You don’t have to worry about collating income tax information from multiple jobs.

The 31 May deadline is the absolute latest your employees should receive a P60. It’s a great idea to timetable your P60 distribution for the end of the tax year. You can issue them from the 5 April. The information about that tax year isn’t going to change from that date. So, why not get it ticked off the to-do list as soon as possible?

Reading a P60

A P60 form includes many personal and financial details. But it’s not new information you need to find—it’s simply a summary of each worker’s financial position during the tax year it refers to. A P60 form is proof of earnings and how much tax each employee has paid.

P60 information includes:

• Your details and employer PAYE reference number
• Employee’s details and National Insurance number
• Annual total pay
• Total National Insurance contributions (NICs) and tax deducted
• Student loan deductions
• Statutory pay received: Shared parental, adoption, paternity, or maternity pay
• Final tax code

Who Needs a P60? (And Who Doesn’t?)

Here’s a quick guide for business owners about who should and should not get a P60.

Your Employees

You need to make sure that all workers employed by you on 5 April receive a P60 by the 31 May deadline. If an employee worked for you more than once during the same tax year, you only issue 1 P60.

Anyone who left before the end of the tax year doesn’t need a P60 because all their information is on their P45. The P60 responsibility lies with the employer at their new job.

Limited Company Director

Don’t forget yourself! If your business is a limited company and you take a salary as its director, then you need to issue yourself with a P60 form, too.

Sole Trader

As a sole trader, you don’t pay yourself a salary, so you don’t get a P60. You just need to give them to your employees.

Self-Employed and Employed Individuals

If you run your self-employed business and are an employee at the same time, you’ll need to make sure you get your P60 form from your employer. Your status as either a sole trader or limited company determines whether or not you need a P60 for your self-employed work.

This is a slightly more confusing position. You fill in a Self Assessment tax return to declare your self-employed income and pay the relevant income tax. And you’ll need the P60 summary of your concurrent employed income and tax payments to complete this tax return accurately. HMRC considers your total pay altogether to make sure that you don’t end up paying too much tax.

Why Are P60s So Important?

Issuing P60 forms is a legal requirement. And, if you miss the May 31 deadline, you can be issued with financial penalties. That’s an immediate £300 and then £60 per day until you issue them. No one wants their hard-earned money lost on unnecessary HMRC fines.

To your employees, their P60 is a very valuable document outside the workplace. As you’ll know if you’ve previously been employed.

P60s are used for:

• Making a claim for tax credits or any other means-tested benefits. This helps them reduce their tax deducted and improve their tax refund.
• Claiming an income tax refund or reclaiming overpaid National Insurance.
• Contributions: You can’t apply for a tax rebate without being able to prove the total tax you’ve paid. Sometimes taxpayers pay too much tax, and the tax office can work out a tax refund more efficiently if it has the relevant P60 form.
• Completing a Self Assessment tax return if both employed and self-employed.
• As proof of earnings for a mortgage, loan, rental, or buying other financial products.

But the importance of the documents to your employees doesn’t need to make this a daunting prospect for you. Issuing P60 forms to your employees is just part of your usual end-of-tax year processes. And using the available software massively reduces the administrative burden.

This post was updated in January 2024.