With this year’s P60 deadline now behind us (31st May), Claire Trott, Head of Advice at St. James’s Place outlines key things employees should consider before filing this important document away.
For many employees, receiving a P60 marks the end of another tax year and something to ignore until later in the year. However, taking a few minutes to review the document now will help ensure your tax affairs are in order and make any future Self-Assessment obligations much easier to manage.
Your P60 provides an important record of your earnings and the tax you’ve paid over the previous tax year. While many people see it as just another piece of paperwork, it can also be a useful reminder to get organised for the year ahead and ensure your records are accurate.
For those with more complex financial arrangements, such as investments, pension income, taxable benefits or different sources of income, keeping track of everything can become more challenging. Financial advice can help people better understand their overall position and make informed decisions with confidence.
Claire shares five key considerations for employees now they’ve received their P60s:
- Check the details carefully: Your P60 is one of the most important tax documents you’ll receive each year, so it’s worth taking a few minutes to make sure everything is accurate. Check that the figures match your final payslip, including your taxable income, National Insurance contributions and tax paid.
You should also check your tax code and National Insurance number. Your tax code may have changed during the year, but the code shown on your P60 should match the one on your final payslip.
- Make sure you’re comparing the right figures: Many people are surprised when the figures on their P60 don’t immediately match what they expect. If you pay into a pension through salary sacrifice or receive other benefits that are deducted before income tax is paid, your taxable income may differ from your headline salary.
When checking your P60 against your payslips, it’s important to ensure you’re comparing like-for-like figures. In these circumstances, it’s the taxable income figure that matters, rather than your overall salary or gross income.
- Keep it somewhere safe and act quickly if something looks wrong: If you spot any discrepancies, contact your employer or payroll department as soon as possible so corrections can be made. HMRC uses this information to determine whether you’ve paid the correct amount of tax, even if you don’t complete a Self-Assessment return. If you do need to submit a tax return, you’ll be required to enter these figures yourself.
Your P60 is an official document and should be stored safely. If you receive it through an online payroll portal, it’s worth downloading a copy and keeping it somewhere secure.
- Understand what your P60 doesn’t include: A P60 only covers income that has already been taxed through your employer’s payroll. If you’ve received benefits that haven’t yet been taxed, such as private medical insurance, these are usually reported separately on a P11D.
If you’re expecting a P11D, you’ll need to wait until you’ve received it before completing a tax return, as it provides information on benefits that may affect your tax position. If you don’t receive benefits that haven’t already been taxed through payroll, you simply won’t receive a P11D.
It’s also important to remember that receiving a P60 or a P11D doesn’t automatically mean you need to complete a Self-Assessment return. However, it’s worth considering whether you need or want to complete one, either because you’re required to do so or to ensure you’re claiming any reliefs you’re entitled to.
- Use it as a prompt to get organised for Self-Assessment: Although the Self-Assessment deadline isn’t until October for paper forms and next January for online, now is a good time to start gathering information you may need. This could include details of State Pension income, savings interest, dividend income, investment gains or losses, and any other sources of taxable income.
If you know you’ll need to complete a tax return the best thing to do is open it as early as possible and select the sections that apply to you. This helps create a tailored return and gives you a clear idea of the information you’ll need to collect throughout the year, making it easier to file your return early and avoid a last-minute rush.
For employees who expect to owe tax, it’s also worth remembering that if you file your return by 30 December, or 31 October if filing a paper return, owe less than £3,000 in tax and are paid through PAYE, you may be able to have the tax collected through your tax code the following year. This can help spread the cost rather than paying it all in one payment, although it will mean a reduction in your take-home pay over the following tax year. There is no charge or interest for doing so.
