What is a P60 Form? Everything You Need To Know : Guide
What is a P60 Form?
The P60 form is an important document in the United Kingdom’s tax system as it elaborately outlines an individual’s income and the deductions that have been made throughout the financial year. Employees as well as tax agencies need to understand why the P60 form is essential and what information it contains so that there can be accurate reporting and adherence to tax policies.
This article discusses the P60 form in all its complexity including its meaning, items included in it, how one can acquire it, how it differs from other tax forms, what should be avoided at all costs when filling it, and recent changes made on it.
What is a P60?
A P60 form serves as a vital document in the United Kingdom, providing a summary of an individual's income and the taxes paid during the tax year, which spans from April 6th to April 5th of the subsequent year.
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 is the importance of a P60 form?
Tax records: It provides a summary of your total pay and the tax you’ve paid over the tax year. This is crucial for keeping accurate tax records.
Proof of income: It serves as proof of your income, which can be necessary when applying for loans, mortgages, or other financial products.
Tax refunds: If you’ve overpaid tax, your P60 can help you claim a tax refund.
Benefits and credits: It may be required when applying for certain benefits or tax credits.
Pension contributions: It shows your contributions to your pension, which is important for your retirement planning.
Securing loans: The P60 form can be used to submit an application for a loan or mortgage showing you are tax-compliant.
Completing Self-Assessment: Businesses and individuals can complete their Self-Assessment tax returns with the P60.
The requirement for a P60 form among self-employed individuals may vary, although HMRC assumes that self-employed people keep comprehensive financial records, there are instances where a P60 may be required as proof of income for self-assessment tax returns. Additional documents that can serve as income verification are bank statements, payslips, a P45 form, and a remittance advice slip.
How to obtain a P60
Your employer is required to provide you with a P60 by the 31 May deadline each year. This document may be delivered to you in either an electronic format or as a printed version.
You can also create a personal tax account with HMRC to access your P60 information online. This account allows you to view or print the details that would appear on your P60.
If you are unable to receive your P60 from your employer, you may reach out to HM Revenue and Customs (HMRC) to request the information that would typically be included in the P60.
If you do not have a P60 form, you can use your personal tax account to view or print the information that would be on it. You can also request an employment history letter from HMRC or download your P60 from your tax account.
What are the common mistakes to avoid when dealing with P60?
Ensure that your personal information, including your name, National Insurance number, and tax code, is accurate. Errors in these details may lead to complications with your tax records.
Additionally, confirm that your tax code is correct, as an inaccurate tax code could result in either overpayment or underpayment of taxes.
It is also essential to verify that your total income and tax deductions are reported accurately, as discrepancies in these amounts can impact your tax calculations, benefits, or loan applications. Furthermore, ensure that all necessary fields are completed, as any missing information may lead to delays or issues with HMRC.
Lastly, if you identify any errors, it is crucial to inform your employer promptly to obtain a corrected P60, as delays in addressing these mistakes can adversely affect your tax and benefits.
The P60 form is your annual money performance rating. As nicely as possible; read it carefully before making any inquiries about things you don’t understand. Your P60 can work for you and keep you out of trouble with taxmen if you only pay enough attention to it and have some knowledge of taxation.
In conclusion, P60 forms are beneficial to both employees and employers since they give a comprehensive overview of income earned and deductions made over the year. If one learns more about what’s contained in their own P60 forms; avoids common mistakes; and updates them concerning appropriate reporting requirements then they can take advantage of this important document.
The insights that come from these tax documents give individuals the ability to plan for accurate tax submissions and future financial decisions.
Icon Offices can help you file your corporation tax filing to HMRC. We can also help your business comply with tax regulations by registering for VAT and EORI.
For more information, contact us at info@iconoffices.co.uk