PAYE (PAY As You Earn) is the HM Revenue and Customs system for collecting income tax from the pay of employees. This system includes standard tax forms which are used at specific parts of employment, when an employee starts employment, when they end employment, annually and at specific change points in employment. In this guide, we look at the P60 and P45 tax forms.
As an employer, you need to deduct income tax and National Insurance contributions (NICs) from your employees' pay and send it to the HMRC.
As an employee, you should receive a P45 or a P60 from your employer that shows you the tax you pay on your wages. If you receive benefits or expenses your employer has to send a form P11D to the tax office.
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You receive a P45 from your employer when you stop working for them. It shows:
You are entitled by law to get a P45 when you stop working for your employer.
P60 is a summary of your pay and the tax and the tax deducted during the year and is very important for the completion of your Self Assessment Tax Return.
Your employer should give you a P60 at the end of every tax year (tax year runs from 6 April to 5 April the next year)
It is very important to keep your P60 safe as you might need it to prove your income if you apply for a loan, a mortgage or to claim back any overpaid tax.
Your employer doesn't have to give you a copy of P11D but he must tell you the details included on the form. This form shows the expenses payments, benefits and facilities provided by the employer.
You can find more detailed information on specific tax forms in the tax guides below
iCalculator's P60 Guides and P60 Calculators include detailed information and guidance to help you understand your P60, identify key parts of the P60, explain how your P60 is calculated and what information you need to know and understand about a P60 as an employee and employer. Our aim with the P60 guides is to provide insight into the correct completion of a P60, whether it be an audit as an employer to ensure your end of year certificates are calculating correctly or as an employee to check that you have paid the right amount of income tax and, if not, how to claim any overpaid tax back.