What is a P60?

What is a P60?

A P60 is a certificate showing the amount of tax you’ve paid on your earnings throughout the tax year, which starts on the 6th of April until the 5th of April for the following year.

It includes information such as your pay for the year, the amount of tax deducted, National Insurance contributions, any statutory payments added (such as maternity/paternity pay) or student loans.

It is a legal requirement that anyone who works on the payroll and receives a salary receives a P60, either electronically or on paper.

What would I need a P60 for?

A P60 is an important document as it is proof of your earnings and the amount of tax you’ve paid, which will be needed for things like completing a self-assessment tax return or applying for a mortgage or loan.

Who receives a P60?

Every worker will receive a P60 from their employer at the end of each tax year.

This includes umbrella company contractors, who are an employee of their umbrella, as well as limited company contractors who are essentially employed by their own company.

A limited company contractor will therefore need to issue one to themselves and to any staff they hire – this is something that your accountant can help you with.

A sole trader does not need a P60 as they don’t pay themselves a PAYE salary, however, if they hire workers then they will need to provide their employees with one.

Do I need an accountant?

You don’t have to hire an accountant, however, if the thought of having to sort out P60 forms or do your own accounts fills you with dread, then an accountant will be a useful asset to you and your business.

Choosing to do your own accounts can seem like a good way to cut costs, but if you don’t have a good understanding of UK tax laws, or you’re just not confident in completing them correctly then it may not be worth it.

It’s important to be aware that HMRC will not give any leeway if you make a mistake – if a tax return isn’t filed properly, this could result in it being rejected, potentially delaying the process and resulting in a fine if it ends up being filed after the deadline date.

An accountant will be able to:

• fill in and file forms, leaving you to concentrate on running your business.
• ensure that you remain compliant with your financial liabilities and keep on top of important deadlines.
• provide useful financial advice that you might not have been aware of, which could potentially save you money in the long run.

Plus, hiring an accountant is an allowable business expense, helping to reduce your tax bill at the end of each year.

To read more about contractor expenses and how they work, take a look at our Limited Company Expenses Guide.

If you’d like to sign up or need any further information, please give us a call on 01442 795 100 or you can email jaime.thorpe@dolanaccountancy.com. There’s also the option to contact us via live chat.