UK Workers to Receive P60 Letters: What You Need to Know
As the end of the tax year approaches, every worker in the UK can expect to receive a vital document from their employer – a P60 letter. This letter, which must be sent by May 31, provides crucial information about an individual’s earnings, tax deductions, and other financial details. In this article, we will explore what you need to know about the P60 letter and why it is essential to check it carefully.
What is a P60 Letter?
According to the Express, a leading UK newspaper, every employee of a company who was still in full-time employment on Saturday, April 5, must be sent a P60 document before May 31. This document, as reported by the Express, covers the period from April 6, 2024, to April 5, 2025, and provides a comprehensive breakdown of an individual’s earnings and tax deductions. The P60 letter will reveal how much money you were paid in salary across the full year, how much was deducted in tax, how much was put into your pension, and how much was taken for student loan repayments, if applicable.
Why is it Crucial to Check Your P60 Letter?
The Express reports that the P60 letter will also feature a ‘final tax code’ – a critical piece of information that requires careful attention. For most people, the tax code will be 1257L, which is the standard tax code for basic-rate taxpayers earning over £12,570. However, as the Express notes, there are several other tax codes to watch out for, including emergency tax codes such as ‘W1’, ‘M1’, or ‘X’, which can complicate tax affairs. If your tax code has changed due to a change in circumstances, you may have paid the wrong amount of tax, and this could result in a refund or a tax bill.
Understanding Tax Codes
The Express explains that certain tax codes require special attention. For instance, a tax code with ‘W1’ or ‘M1’ or ‘X’ at the end indicates an emergency tax code, which may be applied if you have changed jobs or if HMRC has not received the correct details. In such cases, you may be liable to pay the correct tax for the year, and you could be owed money or owe HMRC money. Other tax codes, such as BR, D0, and D1, indicate that all your income is taxed at the basic rate, higher rate, or additional rate, respectively. NT, on the other hand, means you are not paying any tax on the income at all.
The Importance of Checking Your P60 Letter
As the Express reports, research by Canada Life reveals that the average overpayment of tax is £689 in the UK. If you have overpaid tax, you could be owed a significant refund. To ensure you are not missing out on a refund, it is essential to check your P60 letter carefully and verify that your tax code is correct. HMRC advises that your P60 shows the tax you’ve paid on your salary in the tax year (6 April to 5 April) and that you get a separate P60 for each of your jobs every tax year.
What to Do with Your P60 Letter
According to HMRC, as quoted by the Express, you will need your P60 to prove how much tax you’ve paid on your salary, for example, to claim back overpaid tax, to apply for tax credits, or as proof of your income if you apply for a loan or a mortgage. If you think you may have paid too much tax, you can check how much tax you paid last year and take steps to reclaim any overpaid tax.
Conclusion
In conclusion, the P60 letter is a vital document that every UK worker will receive from their employer in the next six weeks. As the Express reports, it is essential to check this letter carefully to ensure that your tax code is correct and that you have not overpaid tax. By understanding your tax code and verifying the information on your P60 letter, you can avoid potential tax bills or reclaim any overpaid tax. The Express advises that workers check their P60 letter as soon as possible to ensure they are not missing out on a refund.
References:
https://www.express.co.uk/finance/personalfinance/2041205/every-uk-worker-sent-letter
