P60
At the end of each tax year, employers must provide all employees that were employed on 5th April with a P60. They must do this no later than the 31st May in either electronic or paper format.
The purpose of the P60 is to provide the employee with a record of how much taxable salary they earned and how much tax they have paid in the tax year. The form records data from both the current employment and any previous employment held earlier in the year.
For individuals who are required to submit a self-assessment tax return, form P60 is the starting point. It can also be used to apply for a tax refund, to support claims for certain tax credits and to support mortgage or loan applications.
If an employer fails to provide a P60, the employee can access the same data from their online account directly with HM Revenue & Customs. They can also request the data that would have been provided by contacting HMRC directly.
P45
When an employee leaves a job, their employer, by law, must provide them with a P45 as part of their final pay documentation. Form P45 summarises how much they have already earned during the current tax year along with details of deductions for tax, student loans, plus their tax code and date they left employment.
There are multiple parts to a P45, one of which goes to HMRC, one of which is retained by the employee and the rest of which goes to the new employer. During the onboarding process the new employer will enter the details from the P45 into their payroll system which will ensure that the first pay calculated in the new job will be correct.
As noted above, it is a legal requirement for an employer to provide a P45, however in cases where no P45 is provided the employer will ask the new employee to complete a ‘Starter checklist for PAYE’ (which replaces the old form P46) to collect the same data. If the checklist is not completed in time for the first payroll and the employee needs to be paid, the employer will put them on an ‘emergency tax code’ which will calculate deductions based on incomplete information but ensure that some tax is deducted. This should be rectified as soon as possible on the next payroll submission.
P11D
Prior to the introduction of ‘Payroll benefits in kind’ on 6th April 2016, form P11D was required to be filed on an annual basis to record non-salary income received by employees. The employee would then be assessed for additional income and their tax code would be adjusted to collect the related income tax; and the employer would be assessed for Class 1A National Insurance.
Since the introduction of payroll benefits in kind, much of what was reported on a P11D is now dealt with through payroll on a monthly basis and therefore the form is required far less often. There are still certain non-salary benefits which must be reported via a P11D, however many common benefits are simply taxed in real-time removing the annual burden of additional reporting and filing. Employers are still liable for Class 1A NIC in the same way as before, however preparing the reporting for this is much simpler for most benefits as the data can be simply be summarised from payroll records.
For further details of Benefits in Kind (BIKs) from both an employee and employer perspective, see this article.