By Ian Holloway, head of legislation and compliance at Cintra HR & Payroll Services
The annual April activities of ending one tax year and starting another seem a distant memory. The final Full Payment Submission (FPS) and Employer Payment Summary (EPS) deadlines are long past, so we are now in Earlier Year Update (EYU) territory if there are adjustments to be made to 2015-16 figures. However, tax year 2015-16 cannot be confined to memory, as there is one statutory deadline looming in May 2016 – the issue of the P60 (this is not forgetting the obligation for the P9D/P11D, though that deadline is in July).
Re the P60, Regulation 67 of the Income Tax (Pay As You Earn) Regulations 2003 makes it a legal obligation for employers to produce the P60 by 1 June annually – that is, it must be provided to the employee by the end of 31 May. In the first instance, note that that the legislative reference is to an employee. There is no statutory obligation to provide a P60 to a worker or someone on a pensioner payroll, as these are not classed as employees in employment legislation. In addition, note the following:
• The statutory requirement to produce a P60 for an employee applies only if they were in employment on 5 April – that is, the last day of the tax year. If an employee left employment on, say, 31 March, there is no statutory obligation to produce a P60 and the new employer should produce one.
• With respect to P45 earnings, if applicable, the P60 needs to split earnings and tax between “this” and “previous” employments. This does not apply to National Insurance contributions or any of the statutory payments that are not calculated cumulatively, and details are not passed from one employer to another.
• Only one P60 should be produced per eligible employee. If the employee had two periods of employment in the tax year, the employer only has an obligation to provide a P60 for the employment up to and including 5 April.
• Duplicate P60s can be issued and no longer have to be marked ‘DUPLICATE’.
• If it is necessary to amend year-to-date figures that have been submitted to HMRC (via the EYU, for example), the employer should provide details of the amendment via a letter or a new P60 that is clearly marked ‘REPLACEMENT’. The only statutory reference that I can find is under 67A of the above 2003 Regulations, though the legal obligation to do this only appears to apply where the amendment has resulted in an increase in the employee’s taxable income. I am sure that employers will want to issue a replacement letter or P60 regardless of whether income has increased or decreased.
Note that the P60 can be provided electronically and this method of provision has been allowable since 2010-11. HMRC’s item, now in the National Archives, confirms that the information requirement is no different and approved forms can be used, such as those generated by payroll software. Importantly, the employer needs to ensure that, if these are printed, the text “this is a printed copy of an eP60” must appear.
The biggest issue facing employers is probably the employee that started after the last payday in the tax year but on or before 5 April. If they were in employment on 5 April, there is a legal obligation to provide a P60, regardless of whether the employee has been paid in that tax year. The result is that the employer may have to produce blank P60s showing that there were no earnings with them in the tax year (but may have P45 earnings from the previous employment).
P60-time comes every year but it never hurts to remind employers of this statutory obligation, I feel.
Posted on 26th April 2016 by Jerome Smail
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