Taxes are an unsavoury business but they are one of the two facts of life (the other, or so we are told, is death). Unfortunately however the unpleasant nature of filling out tax returns, book keeping and filing documents means that many tax payers overlook these jobs and rely on their employers to sort them out on their behalf. If you’re self employed it will be up to you to register with HM Revenue and Customs, to fill out Tax Returns and to keep all your documents safe. However just because you’re employed doesn’t mean you can rest on your laurels either, and relying on your employer and the government to sort out your finances and taxes for you can lead to you losing money through paying too much tax and overlooking important documents, or having difficulty securing a loan or mortgage.
The first consideration are the payslips you are likely to receive at the end of every month. These help tell you precisely how much you’ve been paid which is useful for book keeping and personal records and you are legally obligated to keep them for your records for at least 22 months if you’re employed or 6 years if you’re self employed. Of even more importance however is your P60 which you should also receive from your employer. You should receive these at the end of each tax year (in April) and they should contain information regarding your wages for that year as well as tax deductions, National Insurance Contributions, Income Tax, Student Loan repayments and statutory payments e.g. SMP, SAP and SPP. You should then inspect these forms to ensure that everything has been correctly accounted for – a copy also goes to HM Revenue and Customs (as a P14) and if they notice any inconsistencies you may have to fill out more forms. Furthermore if things such as Student Loan repayments are not included you may find yourself paying back more tax than necessary and you may be able to reclaim some of your tax for that year if you do spot anything incorrect. This should surely be reason enough to keep a close eye on your payslips and not presume your employer is handling it all adequately themselves.
Furthermore in some cases you may not receive a P60 from your employer at all. This could be for a variety of reasons, but may be down to sheer absent mindedness or laziness if you work for a small business. Make sure you’re on the ball come April then and if you do not receive your P60 demand one from your employer. You must also ensure that the payslips looks professional; it should have been printed using HM Revenue and Customs approved software – not handwritten and that you keep it in a safe place. Alternatively, if you leave your job before the end of a tax year you probably won’t receive a P60 for this reason.
You may also want to check your P60s for National Insurance Contributions. This is the government’s own protection scheme and will pay for your wages should you fall victim to illness and will also pay for your pension upon retirement. This should be handled by your employer and should be about 10% of your annual salary. However should they leave it off, or should you wish to opt out of your employer’s pension scheme, then you should speak to your employer and could save yourself some money. As you can see then, there are myriad reasons for you to take an active interest in your payslips and general tax each year.
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Author works for a payslips company and can help you with payslip p60.
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