Every entrepreneur should be aware of his or her legal obligations. One such obligation is to provide all employees on the payroll with a P60.
A P60 shows how much tax an employee has paid during the tax year. As an employer, you must give a P60 to each employee who was working for you on 5 April.
This can be supplied on paper or electronically and must be provided by 31 May. This is one part of Payroll Year End.
This document summarises the total pay and deductions made by every employee in any given tax year.
Employers are legally obliged to give P60s to their employees by 31 May. This will allow enough time to check the details before filing a tax return.
Employees need their P60s to prove how much tax they’ve paid on their salaries and make any claims, for example:
- claiming back overpaid tax
- applying for tax credits
- as proof of income if applying for a loan or a mortgage
P60s include details of earnings and deductions including National Insurance contributions and tax.
These are important elements required by employees. Failure to deliver P60s on time may lead to an investigation by HMRC.