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If you’re an employer or payroll lead in the UK, you’ve likely dealt with P45s and P60s—but do you know exactly when and why each one matters? With over 30 million issued every year, these forms are essential pieces of PAYE documentation. In this article, we break down the differences, uses, and compliance essentials for each. is essential for maintaining UK payroll compliance. These two PAYE documentation forms serve distinct functions and using them correctly helps meet HMRC tax requirements and protect employee tax rights.
What is a P45 Form?
A P45 is a UK tax form issued to employees when they leave a job, summarising income and tax paid in the current tax year.
A P45 is provided to employees by their employer upon termination of employment, regardless of the time of year. It is used to report earnings and tax deductions up to the employee’s final day.
When It’s Issued
- A P45 is issued when an employee leaves a job.
Information It Contains
- PAYE tax code
- National Insurance number
- Total gross pay and tax paid to date in the tax year
- Employer’s PAYE reference number
- Leaving date
Legal Requirements
Employers must issue a P45 as part of end of employment records and ensure accurate payroll documentation in the UK.
Purpose of the P45
- Allows the next employer to apply the correct tax code
- Helps prevent overpayment or underpayment of tax
- Useful when claiming certain benefits
Structure of the P45
The P45 consists of multiple parts:
- Part 1: Sent to HMRC by the employer
- Part 1A: Given to the employee for their records
- Part 2 and 3: Provided to the new employer
When It’s Used
- When starting a new job
- When claiming tax refunds
- For benefit applications
What is a P60 Form?
A P60 is an annual tax summary form provided to employees still on payroll at the end of the tax year (5 April).
The P60 summarises an employee’s total pay and deductions for the entire tax year, including income tax and National Insurance contributions. It is an important document for self-assessment requirements and financial applications.
When It’s Issued
- Annually by 31 May, for anyone employed on 5 April
Information It Contains
- Total earnings for the tax year
- Income tax paid
- National Insurance contributions
- Final tax code for the year
Legal Requirements
Under UK payroll compliance rules, employers must provide a P60 to qualifying employees by the deadline. It forms part of tax year records.
Purpose of the P60
- Acts as an official annual tax summary
- Used for mortgage applications or financial checks
- Helpful in completing self-assessments
When It’s Used
- Submitting self-assessment tax returns
- Verifying income for loans or mortgages
- Confirming PAYE deductions to HMRC
P60 or P45: Which One Do You Need?
Though often mentioned together, there are several crucial distinctions between these forms.
Timing and Frequency
- P45: Issued once when an employee leaves a job
- P60: Issued annually for those employed on 5 April
Information Provided
- P45: Shows pay and tax up to leaving date
- P60: Shows total annual pay and deductions
Function
- P45: Ensures correct tax is applied in new employment
- P60: Serves as year-end proof of income and tax paid
Comparison Table
Importance of P45s and P60s for Employers
Employers must understand their obligations regarding these forms to stay compliant and avoid penalties.
Legal Obligations
- Issue P45s when an employee leaves
- Deliver P60s by 31 May each year
Record-Keeping Requirements
- Store digital or physical records securely
- Ensure accuracy and alignment with digital tax submissions
Digital vs Physical Copies
- Digital records are acceptable and increasingly common
- Paper forms are still used by some smaller employers
Common Pitfalls to Avoid
- Forgetting to issue P60s by the deadline
- Failing to update tax code information before producing a P45
Learn more about our payroll services to stay compliant.
Importance of P45s and P60s for Employees
These forms directly impact an employee’s ability to manage their tax obligations and financial affairs.
Rights Regarding These Forms
- Employees are entitled to receive these tax forms
How to Use Each Form
- P45: Provide to new employer or DWP (benefits)
- P60: Keep for self-assessment, mortgages, or income proof
What to Do if Forms Are Lost
- P45: Cannot be reissued, but employers may give a statement
- P60: Can be reprinted by employer upon request
Record-Keeping Best Practices
- Retain both forms for at least 22 months
- Store digitally in secure personal folders
P45s and P60s – Practical Applications
Knowing when and how to use these forms is important in daily operations.
Using P45 When Changing Jobs
- An employee provides their P45 to their new employer
- Prevents emergency tax code errors
Using P60 for Tax Returns or Mortgage Applications
- Acts as official proof of income and tax paid
- Used in applying for credit, loans, or rental agreements
FAQs
Do I need a P45 if I already have a P60?
Yes. A P45 is issued when leaving a job; a P60 is for those employed at tax year-end.
How long should I keep my P45 and P60 forms?
It’s recommended to keep them for at least 22 months for tax and legal purposes.
Can I get a replacement P45 or P60 if lost?
You can request a duplicate P60. P45s cannot be reissued, but a statement of earnings may be provided.
Does a P45 mean I’ve been fired?
No. A P45 is issued for any reason for leaving a job.
Can I start a new job without a P45?
Yes, but your new employer may place you on an emergency tax code until HMRC updates your records.
Are digital copies of P45 and P60 forms legally acceptable?
Yes. Digital formats are accepted by HMRC and most organisations.
How do P45 and P60 forms affect my tax code?
P45s help ensure continuity of correct tax codes between jobs. P60s confirm the final tax code used.
What should employers do if they haven’t issued P60s by the deadline?
They should issue them immediately and review internal processes to ensure timely submissions in future.
Need Help Managing P45s and P60s?
Understanding what is a P45 and a P60 is crucial for effective UK payroll management. For help with PAYE, tax year records, and employee tax documents, contact J. Dauman & Co. today to ensure full compliance with UK payroll requirements and professional support.