If your small business recently took on staff for the first time then congratulations are in order. Not only does this exciting (and perhaps a little nerve-wracking?) step signal that your business is healthy and growing, but it also suggests your company’s growth rate could begin to accelerate, since new employees have the potential to greatly add to a business’s productivity (and profitability) in the months and years ahead.
However, with all great endeavours comes great responsibility. You will hopefully have gotten to grips with your weekly or monthly payroll obligations by now (including the need for real time reporting). Still, the deadline for another important (and legally required) annual payroll obligation is fast approaching; have you got your P60s in order for the 31st May due date?
A P60 is an annual statement issued to employees after the end of each tax year, summarising their taxable income for the year and detailing any income tax, national insurance contributions, employee pension contributions and student loan repayments that have been deducted via Pay As You Earn (PAYE).
Any employees that are still working for your business at the end of the tax year will need to be given a P60 by 31st May (employees that left your employ before the end of the tax year don’t have to be issued with a P60, since they should have been given a P45 when they left).
It’s important that employees receive (and hold on to) their P60s because they will be needed if they ever have to prove how much tax they’ve paid or how much they earned. For example, a P60 will be required if an employee is claiming back overpaid tax, applying for tax credits, or proving their income during the course of an application for a personal loan, mortgage or rental property.
If you use a bookkeeper or small business accountant to manage your weekly or monthly payroll then they should also be able to create the necessary P60s for your employees after the end of the tax year.
If you manage your payroll in-house the payroll or accounting software you use is likely to include the necessary functionality to generate P60s. For example, Xero, KashFlow and FreeAgent are all able to generate P60s after the tax year has ended.
Failing that, you can order paper copies of the P60 forms from HMRC.
Great, so you’ve got your P60 ducks in a row to ensure you meet the 31st May deadline. Time to forget about annual payroll obligations for another year, right?
Wrong. Don’t forget you have another annual payroll deadline coming up just around the corner – you need to report your employees’ annual expenses and benefits to HMRC by 6th July, and pay any class 1A National Insurance Contributions due on those benefits by 22nd July.
At Accounts and Legal our team of small business accountants can manage the regular payroll process for small businesses, and can also produce P45 forms for employees if they leave the company and create P60s for each employee after the end of the tax year.
Get in touch with Accounts and Legal now to discuss your payroll requirements, or get an instant quote for our services online using our instant accounting quote tool.