| Index »EMPLOYMENT - IMPORTANT FORMS |
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| EMPLOYMENT - IMPORTANT FORMS |
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| PAYE Forms: P45, P46, P60, P11D
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| If you're an employee, your employer must give you certain documents - forms P45 and P60 - about the tax you pay on your wages. If you receive benefits or expenses your employer sends a form P11D to HM Revenue & Customs (HMRC). You get a P45 from your employer when you stop working for them. Let's look at each of these documents in details:
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| Form P45
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| If you leave your job, the Employer you're leaving must give you a form called a P45. It shows your PAYE code number, your total earnings so far for the tax year and how much tax you have paid during that tax year. It's a record of your pay and the tax that's been deducted from it so far in the tax year. Your employer should automatically give you a P45 when you stop working for them. If not, ask for it - you're entitled to it by law.
Your next employer will need the information on the P45, so you can be given the correct code number and have the right amount of tax deducted.
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| It has four parts - Part 1, Part 1A, Part 2 and Part 3. Your employer sends Part 1 to the Tax Office and gives you the other three. When you start a new job, or claim Jobseeker's Allowance, you give Part 2 and Part 3 to your new employer or to the Jobcentre. You keep the remaining one (Part 1A) for your own records.
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| The P45 comes in four parts:
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The employer you are leaving sends Part 1 to the tax office and gives you the rest; |
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You give Parts 2 and 3 to your new employer; |
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You keep Part 4 for your own records. |
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| P45 Shows:
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Your tax code, tax reference number and Tax Office |
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Your National Insurance number |
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When you were last paid |
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Your earnings in the tax year from all your jobs |
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How much tax was deducted from your earnings |
| If you've lost your P45, you won't be able to get a replacement. Your new employer will give you a form P46 to complete so that HMRC can give you a code number for your new employment.
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| Form -P60
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| Shortly after the end of each tax year (5th April), your employer must give you a statement known as a P60'. The P60 form says how much you have earned during the previous tax year, and is proof of the tax you've paid. You may well need to refer to your P60 at a later date. A P60 details your earnings and tax deductions for the current tax year. Your employer provides it. The law requires you to keep a record of your taxable income for at least 22 months after the end of the current tax year. Self-employed people must keep records for up to six years after the relevant tax year.
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| Your P60 is the summary of your pay and the tax that's been deducted from it in the tax year. Your employer should give you a P60 to keep as a record at the end of every tax year (which runs from 6 April to 5 April the next year). If your employer doesn't give you a P60 at the end of the tax year, ask for it - you're entitled to it by law.
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| You might need it:
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To complete a tax return, if this applies to you |
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To claim back any tax you've overpaid |
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To apply for tax credits |
| You may also need it as proof of your income if you apply for a loan or a mortgage - so it's important to keep all your P60s safely.
If you've lost your P60 your employer can issue you with a duplicate - but this must be clearly marked as being so.
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| Form- P11D
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| Your employer uses form P11D to tell HMRC about the value of any 'benefits in kind' they've given you during the tax year. This means benefits or expenses that effectively increase your income, like:
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A company car |
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Private medical insurance |
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Interest-free loans |
| Your employer will only declare them if you've earned at least £8,500 in the year, including the value of the benefits. They will work out how much each benefit is worth, record it on the form and send it to HMRC. They'll also give you a copy, which you'll need for your records or if you complete a tax return. If you apply for a loan or mortgage, banks and building societies will accept form P11D as proof of extra income.
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| Your employer doesn't have to give you a copy of form P11D. But the law says they must tell you what details they've included on the form - even if you've left the job. It's usually easier for them to give you a copy of the form when they send it to the HMRC. If you lose your copy, your employer should be able to let you have another one. If they can't, ask your Tax Office for a copy.
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| TAX AND NIC
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| How Do I Pay Tax?
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| For the employed people tax and NIC will be deducted automatically from your earnings by your employer. Employer then pays them directly to the Inland Revenue. The System for deducting tax is known as Pay As You Earn (usually called PAYE).
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| For most employees, PAYE makes sure that the right amount of tax is deducted over the tax year as a whole. This is done by the use of a tax 'code number', which the tax office tells your employer to use when deducting your tax each pay-day. Your tax office will send you a form P1, telling you what your code number is. They will also tell you if your code changes. Some people are paid weekly. Others are paid monthly. You'll normally get your first pay packet at the end of the first week or month. For further details about the Tax and NIC refer to our section "Tax System in the UK.
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| What Can Be Deducted From Your Pay?
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| Your employer is not allowed to make a deduction from your pay unless:
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Your contract says they can - and your employer has given you a written copy of the part of the contract which says so, or a written explanation of it, before making the deduction |
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It is required or authorised by law, such as income tax, national insurance or student loan repayments |
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You have agreed in writing to a deduction before the conduct takes place for which your employer proposes to make a deduction |
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| If you were overpaid on a previous occasion then these rules do not apply. Your employer will often be allowed to recover the overpayment.
Other situations where the rules don't apply include if you took part in industrial action or if a deduction is made under a court order. Whatever the situation, your employer must still comply with the terms of your contract. If you haven't been paid at all, this counts as a deduction from your pay of all the pay due to you. The right to protection from unauthorised deductions from pay covers anyone who is classed as a worker. 'Worker' has a specific legal meaning - check if you are unsure of you employment status.
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| How Does My Employer Know How Much Tax To Deduct?
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First job? - Ask your new employer for a P46. You will receive a form from the tax office asking for details of your income and employment history. When they receive your completed form the tax office will issue you and your employer with a tax code. |
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Not your first job - Your previous employer should have given you a P45 when you left. This will tell your employer how much you have earned in the current year (if anything) and how much tax (if any) you have paid so far in the current tax year. This information enables them to calculate the correct amount of tax due from your next pay packet. |
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| What Should I Do If I Think I've Paid Too Much Tax?
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| You should write to your local tax office and return any P60s you may have.
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| How Do I Know If I'm On The Right Tax Code?
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| You will find your tax code on your payslip. If you think you're on the wrong tax code, you need to contact your tax office as soon as possible. If you've lost your P45 (given to you by your employer when you stop working) or your payslips and you want to find out what your tax code is, you'll need to give the tax office your National Insuarance Number, and if possible, a tax reference number. Until you get the correct code your employer will be asked to use a temporary code.
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| Why Would I Be Put On An Emergency Tax Code?
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| The emergency tax code is a number followed by the letter L. This is operated by an employer for several reasons: when you start in the middle of a tax year (April 6 to April 5 the following year); for new employees whose pay is above the pay as you earn; or if you don't have a P45 when you start a new job. If your employer hasn't got any previous pay tax details they will often use this tax code. This means that it doesn't take into account any previous weeks that you may have built up from your tax-free allowances. If you're on the emergency tax code, get in touch with your tax office and they will arrange to get this put right.
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| Do I Need To Pay Tax On Income Made From My Savings?
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| Income from savings should only be taxed if you're already earning more than £100 a week (from 6 April 6 2008, You need to ask your bank to have your income from savings paid to you tax free.
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| Do I Have To Pay Tax If I'm A Student?
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| If you're a student you're not treated any differently as far as paying taxes is concerned. For the current tax year 2007 to 2008, the amount of income amount of income everyone is allowed to receive before paying income tax is £5225 (£5,234 for the tax year 2008-9). If you work solely in the holiday periods you may be able to receive your wages without tax being deducted, provided your income from all sources (apart from student loans, scholarships and educational grants) is less than £5,225 for the year. You'll need to complete a student exemption form called a P38, which your employer should give you. If you fill out this form and give it to your payroll department, no tax will be taken from your wages.
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| What If My Income Is Going To Be More Than £5,225 A Year?
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| You should ask your employer for a P46. You will then be taxed under the PAYE system and issued with a tax code that shows your entitlement to any allowance and deductions. Your employer will be informed of your tax code to enable them to deduct the correct amount of tax and National Insurance Contributions from your wages.
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| PAYSLIP
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| What's A Payslip And Why Is It Important?
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| Some employees are paid in cash in a pay packet, and others have their salary paid directly into their bank or building society account.
Either way, you should receive a 'payslip' telling you how much you earned in total, and how much of that amount you get to keep for yourself. It's worth keeping your payslips for at least a year, in case you need to refer back to them.
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| Pay Deductions
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National Insurance Contribution. |
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Income Tax. |
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Pension scheme contributions |
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| Gross Pay
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| Your total monthly pay with no deductions taken off.
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| Net Pay
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| Your total 'take home' pay.
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| Payslip Name: Mr Sample
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| EmployeeNo |
TaxCode |
N.I.Code |
Week/Month |
National Insurance No |
| 012 |
522L |
A |
3 |
KT 66 99 88 D |
| Gross Pay: |
£830 per month(or £10,000 per year) |
| Annual Income Tax: |
£80 per month |
| National Insurance Contribution : |
£45 per month |
| Pension Contribution: |
£45 per month |
| Net Pay: |
£660 per month(or £7,920 per year) |
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