What Is P60 Form? Where & When Do You Need
Tax details are some of the most important pieces of running a business. They’re important to both employer and employee, especially when you’re self-employed. If you’re on top of your finances, then you’ll appreciate what the P60 form does. If you aren’t familiar with form P60, be sure to keep reading to learn more.
Here’s What We’ll Cover:
What Is the P60 Form?
The P60 form is one of the most common tax forms available. It provides both income details and tax details about the previous year. It is generated by Her Majesty’s Revenue and Customs (HMRC) authority. While the form is generated by HMRC, it is provided by an employer or pension provider to individuals.
The P60 form is very important because it provides proof of income and how much income tax you’ve paid. It’s normally received in April and records both tax and national insurance contributions for the previous year.
These tax forms are provided annually by HMRC, no matter how much tax you pay. It also doesn’t matter how the taxes were paid.
Where Does HMRC Get the Information?
HMRC received information for your P60 form from the following sources:
- Your employer provides information to HMRC about your earnings, taxes paid, and benefits received
- Your self-assessment tax return
- Details of any benefits being received from the Department for Work and Pensions (DWP)
- Your pension provider provides information regarding pension payments
When Will I Need This Information?
Your P60 form is a very useful tax document. It doesn’t just show how much tax you’ve paid, it shows how much you’ve earned. This can be useful in a number of scenarios:
- When going through the mortgage application process, proof of income is required
- If you’ve overpaid tax to the HMRC, the P60 can help
- It may be required when trying to claim any entitled benefits
As you can see, the P60 form is an absolute necessity when it comes to day-to-day activities. It can also help you plan your financial future. By analyzing the P60 forms from years past, you can review your financial health.
What All Is Included in the P60 Form?
The P60 form is fairly comprehensive. The information provided by HMRC is meant to capture an entire year’s worth of financial information. As such, a lot of information is included. All of the following areas are covered on a P60 form:
- Your employer’s information
- How much money you’ve earned in the previous year
- Deductions for any student loan payments
- Your national insurance number
- Parental leave information (paternal, maternal, or adoption leave payments)
How Do I Get a P60 If I’m Self-Employed?
If you employ yourself, then you may not get a P60 form immediately from the HMRC. In most circumstances, the HMRC sends them to employers by May 31. However, if you’re self-employed and you haven’t received a P60 form, you’ll need to contact HMRC.
For the most part, HMRC assumes that you’ll be keeping all of your own financial documents if you’re self-employed. However, sometimes a P60 will need to be used as proof of income. If so, HMRC can be contacted.
What Is the Difference Between P45 and P60?
A P45 is similar to the P60. However, the P45 is a form that’s received from your employer when you stop working for them. The P45 form shows how much tax you’ve paid so far throughout the year, and it consists of 4 parts.
- Part 1 and 1A - This part is sent to you as well as HMRC. This is a record of the earnings you’ve been paid, and the taxes that you have paid so far.
- Part 2 - This part is given to your new employer.
- Part 3 - This part is given to your new employer.
There are scenarios in which you will not have been given a P45. You may be starting your first job, or you’re taking on a second job. If your employer hasn’t given you a P45 when you leave, they are legally required to if asked for it.
The P45 form is similar to that of the P60. However, P60 forms show your entire year’s income and taxes, while P45 are only for a portion of the year.
P60 forms are a great way to track your finances from year to year. They let you see how much you’ve earned, as well as how much you’ve paid in taxes. You may need one, too, to use as proof of income. If you need one but don’t have one, HMRC can be contacted for a replacement.
Taxes can be tricky. If you need them simplified, check out our resource hub for plenty of helpful articles!