P11D, P45, P60: A Complete Guide for UK Small Businesses

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The intricacies of tax forms in the UK can be complicated for employers and employees to navigate. Forms like P11D, P45, and P60 have to be understood properly for compliance with HM Revenue & Customs (HMRC) regulations to be ensured and financial reporting done correctly.

If you are starting a business and you want to employ a set of employees, you will need to understand the P11D, P45, and P60 forms for easier tax reporting.

This article comprehensively discusses these forms; their various purposes, challenges one may encounter when handling them, and some tips on managing them well.

An overview of the P11D, P45, P60 forms

P11D Form: Employers in the UK use the P11D form to account for the non-salaried benefits and expenses they give to workers. For instance, branded “benefits-in-kind,” can include automobiles provided by companies, private medical care, or even zero-percent loans.

P45 Form: A P45 form is a document your employer gives you when you leave a job in the UK. It summarises your earnings and the tax you’ve paid during the current tax year. It helps your new employer determine the correct tax code for you, ensuring you don’t overpay or underpay taxes.

P60 Form: The P60 form is a vital paper document used in the UK to provide information concerning the amount of money earned by an individual over a certain period and hence the tax levied on such income during that year which starts from 6th April up to 5th April of the next year.

P11D Form

HMRC requires employers to submit the P11D at the end of the tax year to ensure the correct taxation of such perks. Additionally, a copy of the P11D form should be given to each relevant employee by their employer. It is the responsibility of your employer to submit a P11D form to HMRC if you are provided with any "benefits in kind," such as a company vehicle or private health insurance. The P11D serves as a document of the monetary value of each benefit received. You should expect to receive either a copy of this form or a notification detailing what has been recorded on it.

P45 Form

It is a legal obligation for employers to provide P45 forms on time, and understanding your responsibilities regarding the process of obtaining them can significantly simplify matters.

The form is divided into four parts 1, 1A, 2, and 3.

Part 1: Sent to HM Revenue and Customs (HMRC) by your employer.

Part 1A: Given to you for your records.

Parts 2 and 3: Given to your new employer or Jobcentre Plus if you’re not working.

The purpose of a P45 is to facilitate accurate taxation by notifying HMRC regarding how much tax you’ve paid on your salary so far in the tax year. Additionally, it assists employees in commencing new positions or in the process of claiming benefits should they find themselves unemployed.

Fundamentally, a P45 provides a comprehensive overview of a person's earnings from their prior employment, thereby playing a vital role in both financial documentation and adherence to legal requirements within the UK employment framework.

A P45 does not have an expiration date, meaning that once it is issued by your former employer, you may retain it indefinitely. 

P60 Form

This document presents an overview of an employee’s total income along with the tax and National Insurance contributions they have remitted throughout the tax year. It is issued by the employer even when an employee is employed on the final day of the tax year, which is April 5th. This must be provided by May 31st, either in a physical format or electronically.

The P60 serves multiple functions, including the reclamation of overpaid taxes, the application for tax credits, and the provision of income verification when seeking loans or mortgages.

What are similarities between the P11D, P45, and P60 forms

The purpose of all these forms is for taxation and they are extremely important for correct taxation and adherence to the rules set by HM Revenue and Customs (HMRC). Employers’ engagement: Employers are the ones who ought to offer these employee forms.

Details concerning the employee: Every document contains significant information about the worker, including their name, National Insurance number, and nature of their income together with tax deducted from it.

Timing: They are all given out at particular times before or after employment.

• P45: When an employee leaves a job.

• P60: At the end of the tax year.

• P11D: After the end of the tax year, to report benefits in kind.

HMRC compliance: All forms must be submitted to HMRC to ensure that the correct amount of tax is paid and recorded.

Key differences between P11D, P45, and P60 Forms

P11D

The purpose of this kind of report is to provide details of non-monetary advantages given to workers, like company vehicles or private health cover.

Issuerer: the employers.

Timelines for submission: after the end of the tax year (not later than July 6th).

Recipient: HM Revenue and Customs as well as the employee.

Tax impact: this assists HMRC in computing the tax owed on perks provided for staff members.

P45

Purpose: A record that gives an account of taxation paid on salary up to date of resigning from the workplace.

Issuerer: the employers.

Timing: Given to the employee upon leaving a job.

Recipient: Employee, new employer, and HMRC.

Tax impact: Ensures the correct tax code is used for the new employment or benefits.

P60

Purpose: Summarises the total tax paid on an employee’s salary for the entire tax year.

The one responsible for issuance is the employer.

Timing: It is to be done by the end of the tax year (not later than 30 May).

Who is the recipient: Employee.

Tax impact: For employees to verify the correct amount of tax they paid and for any tax rebate applications.

How you can obtain your P45, P60 or P11D

P11D

The P11D is submitted  to HMRC if you receive any “benefits in kind”, like a company car or private medical insurance. The P11D serves as a document of the monetary value of each benefit received. You should expect to receive either a copy of this form or a notification detailing the information that has been recorded on it.

To download the P11D form see here : https://assets.publishing.service.gov.uk/media/61d858e18fa8f50597fb2f4f/P11D-2021-2022.pdf

P45

It is expected that your former employer will provide you with this document without any prompting. Should they neglect to do this, contacting them and making a formal request is necessary. If the form is still withheld, it is right to ask for a "statement of earnings." However, if they continue to refuse to provide you with the form, the best course of action would be to contact HMRC since they offer help on such matters. If your P45 is misplaced, regrettably, a replacement cannot be issued. Your new employer is required to complete a "starter checklist" to obtain your necessary information.

P60

Your employer is obligated to provide you with this document by April or May. It is not possible to obtain this form directly from HMRC; therefore, if you misplace it, you may request a replacement from your employer, who retains all P60 records for three years.

What are the penalties for late submission of these forms?

P11D

Initial penalty: Should the P11D forms remain unsubmitted by July 6th following the conclusion of the tax year, HMRC reserves the right to impose an initial penalty that may reach £300 for each form.

Daily penalty: Following the initial penalty, further penalties may accrue at a rate of up to £60 per day until the forms are duly submitted.

Employer penalty: Additionally, employers may incur a penalty of £100 for every 50 employees for each month, or part thereof, that the P11D(b) is overdue.

P45 and P60

General penalties: While specific penalties for late submission of P45 and P60 forms are less commonly detailed, failing to provide these forms on time can result in fines and interest charges from HMRC. Employers are required to submit these forms promptly to avoid any compliance issues.

In conclusion, P11D, P60, and P45 forms are important to remain tax compliant with HMRC. With the knowledge gained from this complete guide, it will make it easier for business owners to face the challenging tax reporting head-on.

Icon Offices can help businesses remain tax compliant by filing corporation tax returns, confirmation statements and VAT returns. We can also help businesses with VAT registration and EORI number applications.

For more information, contact us at [email protected]