P45s, P60s & P11Ds - what are they and what are they used for?

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The chances are we’ve all heard of a P45, and some of the more astute amongst us may even have heard of a P60. But how many of us have honestly heard of a P11D? Not many, I would have thought.

Well, the thing is all three fall under the umbrella term of PAYE (Pay As You Earn) forms and they all act as proof of earnings as well as tax paid, including both income tax and National Insurance contributions (NICs).

The thing is, PAYE forms are as important to employers as they are to individual employees, yet very few understand what they are and more importantly, what they are used for.

► The P45 📄

Let’s start with the P45. This is an important document that is issued to an employee at the end of their employment. It details exactly how much taxable income an employee has received as well as the total amount of tax paid.

The document itself is divided into three different sections. Confusingly, Part 1 is itself split into two; Part 1A and Part 1. Part 1A is issued to employees and they must retain this document for their own personal records. The employer sends part 1 to HMRC in order to ensure that they have all the relevant documentation.

Parts 2 and 3 are for employees, and they should retain this until they find a new job. Once they do, they should pass these elements of the P45 on to their next employer.

P45s & PayFit ✅

PayFit automatically generates all leaver P45s for the employer once the latest payroll has been completed. The employer can then distribute these to the employees.

► The P60 📄

A P60, otherwise known as an End of Year Certificate, details an employee’s total taxable gross earned throughout the year. It is also broken down between current employment and previous employment.

The P60 contains details of employees’ National Insurance contributions (NICs) during their current employment as well as any statutory parental pay received and any student loan repayments.

Everyone who’s in employment on the 5th of April, the end of the tax year, will receive a P60 from their employer by no later than the 31st of May.

P60’s are used for record-keeping, self-assessment tax returns through HMRC and proof of earnings. They are also one of three documents, along with a recent payslip and UK passport, that can be used as proof of identity when setting up a personal tax account.

P60s & PayFit ✅

We automatically generate all P60s at the end of the tax year.

► The P11D 📄

A P11D is a form that is used to detail benefits received by an employee that haven’t been payrolled or included in a PAYE Settlement Agreement (PSA). The details of these benefits need to be completed by the employer and then submitted to HMRC. Each employee requires a separate P11D form. The employer is required to send a copy to HMRC and employees will also receive their own copy.

HMRC will then adjust the tax code in order to ensure that the tax due on any benefit is recovered through PAYE.

P11Ds & PayFit ✅

Provided that the benefits have all been appropriately recorded on the PayFit app, the app will then auto-populate all of the relevant P11D information for each individual employee.

Not only does this save a substantial amount of time, but it also reduces the risk of any errors taking place as the need for manual data input is negated.

Interested in finding out how PayFit can help optimise your payroll and HR processes? Then why not book a demo with one of our product specialists?

PayFit blog author

PayFit blog author


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