P45 & P60 and Payslip Documents (UK)

British payroll produces a small set of standard documents, each with a specific job. They are easy to ignore and awkward to be without, because HMRC treats them as the record of what happened and the employer is generally the only source.

The P45

Issued when you leave a job. It records your pay and tax to the date of leaving, your tax code and your leaving date, and it exists so the next employer can pick up where the last one stopped.

This matters because British PAYE is cumulative. Each pay run recalculates tax for the whole year to date rather than treating the month in isolation. Without a P45, the new employer has no year to date figures and must start from scratch, which usually means an emergency code and an overpayment, as the guide to emergency tax explains.

Three things worth knowing:

• It cannot be reissued. If you lose it, the employer is not obliged to produce another. The replacement is a starter checklist completed for the new employer.
• Part 1 goes to HMRC, parts 1A, 2 and 3 to you. You keep 1A; parts 2 and 3 go to the new employer.
• It should arrive with or shortly after the final payslip. A delayed P45 is the most common cause of an emergency-taxed first payslip in a new job.

The P60

Issued by your employer after the end of each tax year, by 31 May. It summarises total pay, total tax, National Insurance and any student loan deductions for the year, from that employment.

A P60 is the standard proof of income for mortgage applications, visa applications, tax credit claims and refund claims. Unlike a P45, it can be reissued, though employers sometimes mark the replacement as a duplicate.

Two checks are worth a minute of your time when it arrives. Compare the total pay figure against what your salary should have produced, and compare the tax figure against what the rules imply at that income, which any UK Salary Calculator will give you. A mismatch at year end is much easier to resolve than one discovered three years later.

The P11D

Reports taxable benefits in kind that were not payrolled: company cars, private medical insurance, interest-free loans above the threshold, accommodation. Due by 6 July following the tax year.

The tax on these benefits is usually collected by adjusting your tax code for the following year, which is why codes drop below 1257L without any change in salary. If you have stopped receiving a benefit, check that it has come off the code, because a stale entry can quietly cost hundreds of pounds. The code structure is set out in the guide to UK tax codes.

Many employers now payroll benefits instead, taxing them in real time through the payslip. Where that happens, no P11D is issued for those items and the amounts appear as a notional addition to taxable pay instead.

The starter checklist

Formerly the P46. Completed by a new employee who has no P45, it asks which of three statements applies: this is your first job since 6 April, this is now your only job, or you have another job or pension.

The answer determines whether the employer applies a full personal allowance, a basic rate code or an emergency code. Leaving it blank guarantees the worst outcome. It takes two minutes and it is the single most effective way to avoid being overtaxed on the first payslip of a new job.

What to keep, and for how long

HMRC's stated minimum for employees is 22 months from the end of the tax year. Six years is the safer standard, because it covers the discovery window for most enquiries and because mortgage lenders routinely ask for three years of evidence.

When something is missing

1. No P45. Complete a starter checklist. Do not wait for the P45 to arrive; the checklist does the same job for withholding purposes.
2. No P60. Ask the employer first. If they have ceased trading, your Personal Tax Account holds the figures HMRC received under real time information.
3. Figures that look wrong. Raise it with payroll before HMRC. Most discrepancies are an unprocessed leaver, a stale benefit or a pension deduction applied at the wrong rate.
4. Overpaid tax from a closed year. Claims can generally be made up to four years after the end of the tax year concerned. After that the money is gone.

Almost everything HMRC holds is now visible in the Personal Tax Account, including employment records, tax codes and estimated income. It is the fastest way to check whether the code being applied matches the one HMRC actually issued, which is frequently where the problem turns out to be.