P45 vs P60: What's the difference?
18th February 2025
Reviewed by RIFT's Assistant Operations Manager, Helen Lambkin
Reviewed by Helen Lambkin Helen Lambkin LinkedIn
Helen has been part of the RIFT family for over 12 years, and for the last 8 years, she’s been serving as our Assistant Operations Manager. She’s the go-to person for making sure the team is fully...
Read More about Helen LambkinGetting the hang of UK tax documents is key for staying on top of your finances, avoiding paying too much and making sure you're on the right side of HMRC. With that in mind, two key forms you should be aware of are the P45 and P60. These documents can sometimes be confusing, but knowing their differences is crucial. So, P45 vs P60 – let’s break it down.
What is a P45?
A P45 is issued by your employer when you leave a job. It summarises how much you’ve earned and how much tax you’ve paid during that employment. This helps to make sure you’re taxed correctly when you start a new job, or if you begin claiming benefits.
Key sections of a P45:
- Employee details: Your name, national Insurance number and employer details
- Tax code: Indicates how much tax you should be paying
- Total earnings and tax deductions: Shows how much you’ve earned and how much tax has been deducted up to your leaving date
What is a P60?
A P60 is given to you by your employer at the end of the tax year. It’s a summary of your total income and the tax you’ve paid. It’s super helpful for checking your tax details or when you need to confirm your financial situation for things like loans or mortgages.
Why your P60 matters:
- Proof of tax payments: Used when applying for loans, benefits or a tax refund
- Tax refund claims: Helps check if you’ve overpaid tax and need to claim a tax refund
- Essential for financial records: Helps keep track of your earnings for the tax year
Key difference between a P45 and a P60
The key differences between a P45 and a P60 are the time they are issued, what they cover and what they are used for:
| P45 | P60 | |
| Timing | Issued when leaving a job | Issued at the end of the tax year |
| Scope | Covers earnings and tax for a specific job | Summarises total earnings and tax for the tax year |
| Use cases | Needed for starting a new job or claiming benefits | Used for tax refunds, loan applications and proof of earnings |
When do you need a P45?
- Changing jobs: Your new employer uses it to ensure you’re taxed correctly
- Claiming benefits or pensions: Helps HMRC determine your tax liabilities
When do you need a P60?
- Claiming a tax refund: Use it to check if you’ve overpaid tax
- Applying for loans or mortgages: Verifies your earnings and tax contributions
- Cross-checking tax records: Ensures your tax records are accurate with HMRC
Why it's important to keep both documents
Keeping both your P45 and P60 is essential for maintaining accurate tax records and avoiding potential issues with overpayment or underpayment of tax. These documents are often required for financial applications, including loans and mortgages, and they can simplify the process of completing tax returns. Having them on hand ensures you can quickly access your earnings and tax details when needed.
Get help with your tax returns
Understanding P45 vs P60 helps you stay on top of your tax records and avoid costly mistakes. If you need help with tax rebates, checking your tax code or making sure you’re paying the right amount, RIFT Refunds is here to help.
Get expert tax advice today and make tax worries a thing of the past.
