A P60, also known as an end-of-year certificate, is a document that employees receive every year. It details in full how much the employee has earned in that financial year, and how much they have paid in income tax, National Insurance contributions, statutory payments made to the employee, and student loan repayments.
At the start of a new tax year, an employer is obliged to issue a P60 to all employees on the PAYE system by 31 May every year. If an employee was working for you on 5 April in any given year, you are obliged to provide a P60 for them for that year, even if you have only employed them for that month. You are not required to issue P60s to employees who have left the company during the tax year. This is because all the information necessary to include on a P60 will already be included on the P45 you issued when they left the company. Independent contractors are not issued a P60 as they pay their tax via self-assessment.
A P60 is generated by employers, rather than HMRC. They may be issued on paper or electronically. The latter is increasingly preferred by employers and employees alike as it is more cost-effective for the employer and more convenient for the employee, while also mitigating the risk of loss. If an employee loses their paper P60, an employer may issue an online statement of earnings which provides the same information. All necessary information is sent directly to HMRC in their tax returns.
What information does a P60 contain?
A P60 contains all the information necessary to identify the employee and detail their earnings and tax commitments for the year. It includes:
the employee’s name
their National Insurance number
their gross pay
income tax paid
their National Insurance contributions
any statutory pay such as sick pay, maternity pay, paternity pay etc.
their student loan deductions for the year
Why is a P60 important for your employees?
A P60 is vitally important for employees as it demonstrates their income and shows that they have met their obligations as a taxpayer. If your employee applies for a mortgage or other form of credit, creditors will likely expect to see their P60 as proof of their income.
An employee will also need their P60 if they earn income from self-employment alongside their work with you, and will need to submit it to HMRC along with their self-assessment. A P60 also helps HMRC to identify when any tax rebates or additional payments are due.
Frequently asked questions about P60s
I’ve just started self-employment. Do I get a P60 at the start of the tax year?
If you are a self-employed small business owner or freelancer, you will not be issued a P60. This is because they are issued by employers rather than by HMRC. Instead, you will be expected to submit a self-assessment tax return to HMRC every year.
How do I produce a P60 for my employees?
You can usually generate a P60 using your payroll software. If you are unsure of how to do this, contact your payroll software provider. If your payroll software is unable to generate a P60, you can use HMRC’s basic PAYE tools to produce it.
What happens if I fail to issue a P60 to an employee on time?
You have until 31 May to issue a P60 to their employees. Otherwise, you may be heavily fined by HMRC. An initial £300 penalty is due, followed by an additional fine of £60 for each day that a P60 has not been issued.