P45 and P60 forms are two of the most important official documents in the UK’s PAYE (Pay As You Earn) payroll system. Both are statements of earnings and tax deductions, but they are issued at different times and for different purposes.
It is a legal requirement for every UK employer to provide these forms correctly and on time.
What is a P45 Form?
A P45 (Details of employee leaving work) is the form an employer must give to an employee on their last day of employment.
This document is crucial because it summarizes the employee’s total pay and tax deductions from the start of the current tax year (April 6th) up to their leaving date.
A P45 has four parts:
- Part 1: Sent to HMRC by the employer.
- Part 1A: Kept by the employee for their records.
- Part 2 & 3: Given by the employee to their new employer (or to Jobcentre Plus if they are claiming benefits).
The new employer uses the P45 to put the employee on the correct tax code, ensuring they don’t overpay or underpay tax in their new role.
A P45 (Details of employee leaving work) is the form an employer must give to an employee on their last day of employment.
This document is crucial because it summarizes the employee’s total pay and tax deductions from the start of the current tax year (April 6th) up to their leaving date.
A P45 has four parts:
- Part 1: Sent to HMRC by the employer.
- Part 1A: Kept by the employee for their records.
- Part 2 & 3: Given by the employee to their new employer (or to Jobcentre Plus if they are claiming benefits).
The new employer uses the P45 to put the employee on the correct tax code, ensuring they don’t overpay or underpay tax in their new role.
What is a P60 Form?
A P60 (End of Year Certificate) is a summary document given to all employees who are still on your payroll at the end of the tax year (April 5th). Employers must provide this form to their employees by May 31st.
The P60 summarizes the employee’s total pay and total deductions (like income tax and National Insurance) for the entire tax year.
It is a vital document for the employee, used as:
- Proof of income for mortgage or loan applications.
- A reference for completing a self-assessment tax return.
- Evidence for claiming a tax rebate or applying for tax credits.
P45 vs. P60: Key Differences
| Feature | P45 Form | P60 Form |
| Purpose | A “leaver” document | An “end-of-year” document |
| Who Gets It? | Employees who are leaving your company. | All employees on your payroll on April 5th. |
| When Is It Issued? | On or just after the employee’s last day. | At the end of the tax year (by May 31st). |
| What It Shows | Pay and tax for the current tax year to date. | Pay and tax for the entire previous tax year. |
Why P45 & P60 Compliance is Critical?
For UK employers, issuing P45 and P60 forms is not just good practice—it is a legal obligation.
Your payroll system must accurately calculate all year-to-date figures for leavers (for the P45) and generate a correct annual summary for all current staff (for the P60). Failure to do so can result in significant penalties from HMRC and create serious issues for your employees.
Managing year-end reporting and leaver processes can be complex, especially for international businesses new to UK regulations. Our Managed UK Payroll Services handle all statutory requirements, from real-time submissions to P45/P60 generation, ensuring you are 100% compliant.
For more insights on employer responsibilities, read our UK statutory compliance.
Don’t risk non-compliance with complex UK payroll laws. Contact us today for a free consultation to see how we can simplify your payroll operations.