What is a P60 Form: When You Need It & Why You Might Not Have One

As a self-employed person or small business owner, it can be challenging trying to grapple with the various HMRC terms or forms you require.

Here's the low-down on the P60, so you'll get clear on the basics, and understand what's the right approach you should take-whether you're a freelancer, contractor or employer.

A P60 is an official form you obtain at the end of the tax year.

It indicates how much you've earned over the tax year (this starts on 6th April, and ends on 5th April of the following year), as well as the amount you've paid in PAYE income tax and National Insurance contributions.

Apart from providing a record of important information (such as the amount of tax you've paid), the form is also a proof of income, and you may be required to provide the P60 in certain instances.

These include:

1. Applying for a loan or mortgage

A mortgage broker or bank will want to see consistent income after tax to assess what level of risk they are willing to accept by providing you with a mortgage and how much you can afford to repay each month.

If you're self-employed and need to apply for a mortgage, check out our comprehensive guide on self-employed mortgages and how to get one.

2. Claiming a Tax Refund

How can you claim a tax refund without a record of tax paid? With a P60 form you'll be able to show your level of income and claim a tax refund.

This will help you claim back any overpaid Income Tax or National Insurance. This could happen if you've switched jobs and previous employers were calculating your tax.

3. Applying for Tax Credits

You'll need be able to show your income if you're applying for anything means-tested, such as tax credits.

Refer to Gov.uk's resource on how to claim tax credits for further information.

1. Being Self Employed

As a self-employed individual, you aren't part of a PAYE scheme, and so you won't obtain the P60 form.

You're required to file your Self Assessment tax return annually to show your income though.

2. Employed vs Self Employed

You'll get a P60 from your employer, but are also required to file your Self Assessment tax return.

That's because your P60 only indicates your income and deductions from your job, and not the income you obtain as a self-employed person.

3. Sole Traders

As a sole trader, you aren't drawing a salary, and so you're not required to issue yourself a P60.

However, you'll need to issue the form if you have employees, or are drawing a salary from other employers.

4. Multiple Jobs

If you held jobs with different companies between April 5th then you'll need a P60 form from each company. You should ensure that a previous employer has issued your P60.

If you're drawing a salary from your limited company, you'll need to issue yourself a P60 form.

And if you have employees, you'll need to generate P60 forms for your staff. These forms should be handed to them by 31st May.

If you are working as a contractor, then you should complete a Self-Assessment to calculate how much you've earned.

If you need help with your Self-Assessment 2019/2020, we can help you with your filing which will need to be done by January 31st 2021.

If you're a contractor working through an umbrella company, you'll receive a P60 as the umbrella company is considered an employer.