Tax Forms: Knowing Your P45 From Your P60 And Everything In Between

It is the responsibility of all employers to provide their workers with documents which inform them of the tax that they have paid throughout their employment. There are a number of PAYE forms – some of which may seem more familiar than others, for example we have probably all heard of the P45 and know its association with leaving an employment. But how many of us know the purpose that a P11D would serve for us?

In this article, we will explore the functions of the different PAYE and the importance that these documents hold for your employees.

P45 / P46

P45s are issued to employees when their employment ceases – it provides them with a record of the pay that they have received and the tax that has been deducted for the tax year. As well as earnings for the tax year, P45s will document the date that an employment began, the date that it ceased, your National Insurance number, tax code, PAYE reference number and tax/National Insurance deductions.

P45s come in four parts – Part 1 must be sent to the HMRC while the other three parts are to be issued to the employer. Part 1A can be kept for the employee’s records while Parts 2 and 3 will be required should they wish to start another job or claim Jobseeker’s Allowance.

Employees are entitled to a P45 by law therefore it is important that these are issued in a timely fashion. If employees do not have a P45 when they begin their employment with you, for example if it there first or second job then a P46 can be used as an alternative to establish the amount of tax an employee should pay.

P60

P60s denote the amount of pay that an employee has received in the tax year. This should be provided to employees at the end of each tax year as a summary to keep for their records. Again this is a legal requirement for employees who are still working for you on 5th April.

Employees are likely to require their P60 for a number of tasks including completing their self-assessment tax return, claiming back any tax or National Insurance deductions or to apply for tax credits.

This can now be given to employers in paper format or electronically. If you would like to submit your employees’ P60s electronically then you should seek their permission for this first.

P11D

P11Ds are used to identify to the HMRC any benefits that your employees may have had throughout the year as these could effectively increase their income. If your employee has earned more than £8,500 per year then you must ensure that all benefits such as company vehicles, private medical insurance are declared. It is important that this is completed accurately as P11Ds may be required by banks if employees are looking to secure a mortgage and to help them complete self assessments.

The calculated worth of the benefits should be documented on the P11D and sent to the HMRC who will this for tax purposes.

Tax can be taxing for any employers however it is vital that the correct forms are completed, submitted and given to employees in a timely manner. If you are struggling to get your head around tax procedures, you may wish to consider seeking the guidance of a professional firm of Chartered Accountants who may be able process all aspects of PAYE for your employees and take the weight off your mind.