I'm hoping someone can help clarify something for me. I do the payroll for a small business and I'm having a disagreement with one of the employees about what tax documents they can expect for the tax year 2011/12.
The same business changed company names throughout the tax year, so from April to May 2011 the first company ended and the second company started from June 2011. A P45 was issued to the employee for the period April to May 2011 and I've told the employee that they will receive a P60 for the period June 2011 to end tax year 2012 - so they will have a P45 and a P60 for the tax year.
The employee believes that they should have two P60's as they are arguing that a P45 is not an acceptable document of earnings for the year. I just want to confirm that my understanding is correct - the P45 is an acceptable document of earnings and a P60 won't be issued as well as the P45 for the first company.
thankyou so much for confirming this, I was getting worried I was wrong! I think the confusion by the employee is that on the P60 there is a section for 'previous employment', however I have never seen this section used before, does anyone know when you would use this section?
I am assuming this section would be used if an employee started with you in the middle of a tax year. You would need to put in the details from their P45 (if they had one) that they gave you for their previous employment, thus giving them a total tax paid for the tax year.
Yes, Pauline's right. The section would contain the P45 figures given by the first company in June 2011 in this case.
Kate, you can point out to the employee that the document for earnings throughout the year is the total of 'previous employment' and 'this employment' given on the P60.
So, is it not ok for the employee to have the P45 for the first company and then the P60 for the second company (with the P60 only including the earnings for 'this employment')? I didn't do the payroll at the time of the first company, so I don't have the Employers P45, although the Employee has their P45 copy. So, I don't see how I can fill in the 'previous employment' on the P60, is my way of thinking correct?
Is there two ways it can be done - the employee can have the P45 for the first company and the P60 for the second company (with the P60 only including the earnings for 'this employment') OR they can have 1 P60 which will contain the earnings for 'previous employment' and 'this employment' ?
The P60 includes the previous earnings if the employee gave you a P45(3) when they started with you, or if subsequently HMRC has sent you a P6 with previous earnings on it.
The employee will have 1 P45 from the previous company and 1 P60 from the new company. Have you not seen the P45 from the previous company at all? You will have needed to put the total pay and total tax from this into your payroll software when they started with the new company, otherwise your P60 will not be correct. When you produce the P60 at year end the software will take the figures from the P45 and put them in the "previous employment" boxes and pay and tax from current employment in the "this employment" boxes, and then total them up in the boxes below that to make total figures for the tax year.
The employee can not have a P60 for the previous company as P60s are only produced at year end and they were not employed by that company at year end. The P60 must include total figures for the tax year, not just tax and pay in this employment.
