P60 and P45 Explained: What They Are and Why They Matter

Your P60 and P45 are two of the most important tax documents you'll receive as a UK employee. Yet many people don't fully understand what they contain or why they matter.

This guide explains both documents, what to check, and what to do if something looks wrong.

What is a P60?

A P60 is an end-of-year summary of your pay and deductions for the tax year (6 April to 5 April). Your employer must give you a P60 by 31 May each year.

What a P60 shows:

• Total gross pay for the year
• Total income tax deducted
• Total National Insurance contributions (employee)
• Student loan deductions (if applicable)
• Your tax code at the end of the year
• Your National Insurance number
• Your employer's PAYE reference

Why your P60 matters

Your P60 is used for:

1. Tax returns — if you complete a Self Assessment return, you'll need your P60 figures
2. Claiming tax refunds — if you've overpaid tax, your P60 is the starting point
3. Mortgage applications — lenders often ask for P60s as proof of income
4. Benefits claims — some benefits require proof of income
5. Pension calculations — some DB pension schemes use P60 figures

How to check your P60 is correct

Compare your P60 figures against:

1. Your final payslip of the tax year — the year-to-date figures should match
2. The calculator — enter your salary and tax code to verify the expected tax and NI
3. HMRC's online account — your tax account at gov.uk should show the same figures

Common errors to look for:

• Wrong tax code applied for part of the year
• Missing or incorrect student loan deductions
• Employer NI shown instead of employee NI
• Benefits in kind not included in taxable pay

What to do if your P60 is wrong

1. Contact your payroll department first — they can issue a corrected P60
2. If the error means you've overpaid tax, contact HMRC to claim a refund
3. If you've underpaid tax, HMRC will usually collect it through an adjusted tax code the following year

What is a P45?

A P45 is a document you receive when you leave a job. It shows your pay and tax deductions from the start of the tax year to your leaving date.

A P45 has 4 parts:

• Part 1 — sent by your employer to HMRC
• Part 1A — kept by your employer
• Parts 2 and 3 — given to you; you give Part 3 to your new employer

What a P45 shows:

• Your tax code at the date of leaving
• Total pay and tax deducted in the current tax year
• Your leaving date
• Your employer's PAYE reference

Why your P45 matters

Your P45 is essential when starting a new job. It tells your new employer:

• Your tax code, so they can deduct the right amount of tax from day one
• How much you've already earned and paid tax on in the current year

Without a P45, your new employer will put you on an emergency tax code (usually 1257L W1/M1 or BR), which often results in overpaying tax.

What if you lose your P45?

Your employer cannot issue a duplicate P45 — HMRC rules only allow one to be issued. If you lose it:

1. Ask your previous employer for a statement of earnings (not a P45, but useful for reference)
2. Complete a Starter Checklist for your new employer
3. Contact HMRC to update your tax code directly

P60 vs P45: key differences

Electronic P60s and P45s

Most employers now issue P60s and P45s electronically through payroll portals. These are legally valid — you don't need a paper copy.

Check your employer's HR or payroll portal (e.g. Workday, SAP, ADP) to download your documents.

Summary

• Your P60 is an annual summary of pay and deductions — keep it for 6 years
• Check your P60 against your final payslip and HMRC records
• Your P45 is issued when you leave a job — give Part 3 to your new employer
• Without a P45, complete a Starter Checklist to avoid emergency tax
• Both documents are available electronically through most payroll systems