It’s one of the most common tax forms out there and one that everyone - whether employer or employee - should know about.
The P60 is essential for employee record-keeping - a handy document that provides rock-solid proof of an employee's earnings.
As an employer, you are legally obliged to provide every employee with a P60 before the 31st of May. But why is this so important? And do you really have to issue one to every employee, or are there exceptions?
We’ll go over everything you need to know about P60s and how you can make accessing them easier for your employees.
What is a P60?
The P60 is a handy piece of paperwork issued by employers to each of their employees (bar a few exceptions). In short, it shows how much a specific employee has been paid in a given tax year; in other words, all the taxable income or National Insurance they’ve paid throughout the year.
The P60 acts as a sort of End of Year certificate and is often the best way for your employees to prove their income. For that, and many other reasons, it’s crucial your employees receive theirs.
Why do employees need them?
As an employer, it’s your legal obligation to provide a P60 to every employee annually. We’ll talk about the exceptions (as there are a few) in a bit.
But why? Simply put, a P60 is one of the best ways for your employees to prove their income. Whether it’s to do with a tax situation, filing a self-assessment or applying for a mortgage, a P60
offers solid proof of earnings.
That, along with the legal implications, makes the P60 an important part of preparing for the new tax year.
When do I need to give my employees a P60?
It’s important to issue P60s on time. Employees need to receive theirs on or before the 31st of May.
While the 31st is the hard deadline to meet, we highly recommend issuing your P60s ahead of time. That gives you, as an organisation, time to deal with any anomalies and a chance for your employees to come back with any questions they might have.
PayFit automatically issues P60s to all employees when you run your March payroll, giving you plenty of time before the deadline.
What happens if I don’t issue P60s on time?
As mentioned above, there can be hefty fines for employers who don’t meet the deadline; this includes an initial £300 penalty for late issuing and then £60 for every day after until a P60 is issued.
Who should get a P60?
While you’re legally obliged, as an employer, to provide each of your employees with a P60, there are exceptions.
For one, these should only be issued to employees who are still working for you on the 5th of April 2022. So if an employee leaves before then or starts after then, they shouldn’t receive a P60 from your company.
There are a couple of other exceptions to consider:
My employee started with my company in March but wasn’t paid until April 2022? What should I do?
In this case, the employee hasn’t had earnings for your company's 2021-2022 tax year. That means there’s nothing to report to HMRC for that employee. As a result, there's nothing to record on a P60, so no P60 is due to that employee.
What if an employee hasn’t submitted their P45. Can I correct a P60?
Another question we often get is whether to correct a P60 if an employee doesn’t provide their P45 before they get their P60. And the answer is no.
If you think about it, adding a P45 to an employee’s record that’s based on earnings from the previous tax year (2021-2022) could impact that employee’s March pay. At this point in the year, the March FPS will have been sent to HMRC, which may have already adjusted the employee’s tax code for the new tax year. So you should avoid making this change, so your employee isn’t taxed incorrectly.
How can I make accessing P60s easier for my employees?
P60s can either be shared in a printed or digital format. Whichever you decide to go with is up to you and what’s suitable for your company.
What’s important is to ensure that the way you share all employee tax documents (e.g. payslips) is consistent. So if you print your payslips and hand them out to the employees, you should keep the same practice when sharing their P60s. That helps avoid confusion and queries from your employees.
While printing payslips and tax forms might seem more tangible, there are several advantages to making all of this digital:
“There is so much technology around now that it just makes sense to host all of your employee documents in one place.
Consider all times you’ve been asked to ‘re-print a payslip’ or that the employee has ‘lost their P60’. It makes sense to store these in a digital format.
Many payroll software now, for example, PayFit, include an employee platform that can be used to host documents such as employment contracts, payslips, P60s and P11Ds.
If you're not able to move from your existing software, you might consider a third-party employee document portal.”
Make sharing P60s easy with PayFit
With PayFit, sharing P60s with your employees becomes a breeze.
Our secure employee portal allows employees to log in and access their P60s. In fact, all important paperwork such as tax forms and employee contracts are stored as digital documents that are easy to download at any time.
Forgotten password? No problem! Employees have the ability to reset their own login details, so there’s no more struggle with password-protected documents.
One login, one portal. One simple solution.