The Importance of a P60
P60 and Why Your Accountant or Employer Should Provide you one?
A key part of the UK tax system is PAYE (Pay as you Earn), about 32.53 million (2019) people are employed, work and pay employment taxes in the UK as per the Office of National Statistics. It is therefore very important for individuals to understand how they are taxed and the basic forms that apply to them. Our Accountants have worked hard to explain in this article what a P60 is, its importance, and how it might apply to you.
Related: If you are an employer or thinking about employing people you should read our comprehensive payroll compliance guide.
What do You Need to Know About Form P60?
The P60 form is a detailed document issued by the employer to their employees at the end of every tax year. This document provides a complete summary of your income and tax payments which have been deducted from your pay at source, the P60 shows all the details about your employment-related earnings. It also presents complete information about any deduction that is taken off during the employment tenure, which may include your tax and National Insurance (NI) as well.
This form provides every bit of information you need to know about your tax payments related to your employment. You can use this form to calculate whether you have underpaid or overpaid during a tax year. If you have overpaid then you can try and pursue a tax refund after filing a claim.
A tax year begins from the 6th of April and ends on the 5th of April the following year, your employer should provide you with a form P60 latest by 31st May after a tax year has ended. If you earn more than £100,000 a year from employment or have multiple sources of income other than employment income you should speak to a competent accountant.
If you are an employee in the UK, you don’t have to worry about reporting on your taxes, as your employer will manage it. However, if you have a business besides your regular employment to manage, then, you should speak to a payroll accountant an accountant to help you file an annual self-assessment tax return and a corporate tax return for the business.
Related: Learn how you can complete your self-assessment tax returns by reading our step-by-step guide
Sample P60 can be seen below:
Why didn’t you Get Your Form P60 Yet?
If you haven’t received your form P60 from the employer yet, then this might be due to 3 reasons:
- You left your employers employment and would have received a P45 instead.
- Your employer sent a P60 but this was lost, you can request a copy
- Your employer is not operating payroll, you should report them to HMRC if they deduct taxes and issue you with a payslip
Ensure that you take note of your employer’s non-compliance to avoid any potential tax problems in the future
If you are Claiming Tax Relief, What Items can be Used for This Purpose?
If you enrol yourself under the PAYE regime in the UK, then you are eligible to apply for tax refunds on several items, but the amount you can claim depends upon the tax you have paid for those items.
You can provide information to a payroll accountant or tax accountant about the tax you have paid on several items to know the actual amount of tax relief you can claim.
What about flat rate deductions?
Flat rate deductions are a set amount of tax deductions introduced by HMRC. Flat rate deductions depend upon the industry the individuals working in, for instance, firemen, agricultural workers or teachers have different flat rate deductions respectively.
Know more about the flat rate deductions in detail by speaking to a nearby accountant
What about employment-related expenses?
If you incur an expense on purchase of an item used either wholly, exclusively and necessarily for work-related purposes, then you are eligible for tax relief. This relief excludes all the items you use in your personal life.
The eligibility of this claim for such items is only valid if you didn’t receive any reimbursement for the items you purchased for job-related purposes. You may still get a refund even if the reimbursement amount was taxed.
Also, you should keep in mind that your claim would only be valid if you have paid taxes for the year in which you filed a claim.
Related: Learn more about how you can claim job-related or business expenses while carrying out your duty by reading our comprehensive guide.
What about specialized clothing?
You can also claim expenses incurred by cleaning, repairing or replacing your uniform or other specialist clothing.
How can you claim your tax back?
You have the option to avail online services on HMRC’s website or file a self-assessment tax return when claiming for a tax refund. You can always submit form P87 instead of filing a self-assessment tax return.
Clear house accountants are expert London based accounting, providing quality payroll, tax and business advisory services to a variety of businesses operating in the UK. Our fully trained accountants ensure quality financial reporting, provide bespoke solutions and help implement effective payroll processes.
Jibran Qureshi FCCA is the Managing Director of Clear House Accountants, and has over 10+ years of experience in practice and across multiple industries. Jibran’s educational background includes a Master’s in Financial Strategy from Oxford University and an Executive MBA from Hult International Business School. His experience in Financial Strategy, Tax Planning, Operational Consultancy and Performance Reporting guide his cognizant approach to leading Clear House and its clients to the future. It was this dexterity that led him to be Enterprise Nation’s Top 50 Advisors.
Jibran is fueled by his passion for helping businesses. He unequivocally believes that as business advisors and accountants for our clients, it is our responsibility to work with them as business partners. As specialists, it is our duty to help our clients navigate through the complexities of constant change and the implications that come with it.
Over the past decade, innovative disruptions have changed the way businesses work, everything from cloud software, innovative business models, to AI and machine learning, have impacted how businesses operate, grow, and expand.
Jibran recognized the need to manage these disruptions sustainably, early on and shaped Clear House Accountants to not just be compliance specialists, but advisors who help build complex ecosystems around cloud accounting software, provide advice on funding support, help manage innovative tax schemes, set up and implement complex strategic plans, and much more. So, his clients can thrive, not just survive.
Jibran developed his prime role as the Managing Director to build Clear House’s capabilities so it can add value for their clients. He is of firm belief that this can be done through consistent high-level training, building the right tools, and creating roadmaps to help businesses cope with prospective disruptions. He envisages that every client that comes on board, is provided maximum value through onboarding, ongoing services and the right mix of tools to help them become the best in the world.