P45s and P60s

If you work in the UK, you’ll almost certainly come across two important tax documents during your working life: the P45 and the P60. They both relate to the tax you pay on your income, but they’re used at different times and for different reasons. Knowing what they are and how to read them can help you avoid overpaying tax and spot mistakes early.

What is a P45?
A P45 is a document you receive from your employer when you leave a job. It shows how much you’ve been paid and how much tax you’ve paid in that job so far in the current tax year.

Your P45 is split into several parts:
- Your personal details (name, address, National Insurance number)
- Your tax code
- Your total pay from that employer in the tax year so far
- The total tax deducted from that pay

Why is a P45 important?
Your P45 helps make sure you’re put on the right tax code in your next job and that you don’t overpay tax. When you start a new job, you should give your P45 to your new employer so they can pass the information to HMRC.

If you don’t have a P45 (for example, it’s lost or your employer didn’t give you one), your new employer will usually ask you to fill in a starter checklist so they can work out the right tax code.

When do you get a P45?
You should get a P45 when:
- You resign from a job
- You’re made redundant
- Your contract ends

You do not get a P45 when you move to a new role within the same company without leaving employment.

What is a P60?
A P60 is a summary of your pay and tax for the whole tax year from a particular employer. It shows:
- Your total pay for the tax year
- The total tax you’ve paid
- National Insurance contributions
- Student loan deductions (if any)
- Other deductions that may apply

Your employer must give you a P60 if you’re still working for them on 5 April (the last day of the tax year). They usually provide it by the end of May.

Why is a P60 important?
Your P60 is your official record of what you earned and how much tax you paid in a tax year. You may need it for:
- Proving your income (for example, for a mortgage or loan)
- Claiming a tax refund
- Checking that you’ve paid the right amount of tax

You should keep your P60 somewhere safe. Many people keep them for several years in case they need to refer back to them.

Key differences between a P45 and a P60
Although both documents relate to your pay and tax, they’re used in different situations:
- Timing:
- P45: Given when you leave a job during the tax year.
- P60: Given at the end of the tax year if you’re still employed.

- Purpose:
- P45: Helps your new employer and HMRC know how much you’ve earned and paid in tax so far that year.
- P60: Summarises your total pay and tax for the full tax year with that employer.

- Who gets it:
- P45: You get it when you leave a job, and you pass parts of it to your new employer.
- P60: You keep it as your own record.

Common issues and how to handle them
1. You’ve lost your P45 or P60
If you lose your P45, your new employer can still put you on the correct tax code using a starter checklist. If you lose your P60, you can ask your employer for a replacement or a statement of earnings.

2. Your details are wrong
If your name, address, or National Insurance number is wrong, ask your employer to correct their records. If your tax code looks wrong, you can contact HMRC to check it.

3. You think you’ve overpaid tax
Use the figures on your P45 or P60 to check your tax. If you think you’ve overpaid, you may be able to claim a refund from HMRC.

Final thoughts
P45s and P60s might look confusing at first, but they’re simply records of what you’ve earned and how much tax you’ve paid. Understanding them is a key step towards becoming more confident and informed about your tax situation.

Always keep these documents safe, and don’t be afraid to ask questions if something doesn’t look right. That’s how you build a tax-savvy future.