If you employ even one member of staff, HMRC expects you to issue specific payroll documents at the right time and in the right format. P60s, P45s and payslips are not optional extras — they are legal obligations. Get them wrong, issue them late, or omit required information and you risk financial penalties, employee disputes, and strained relationships with HMRC. Whether you are running a small café in Manchester, a freelance agency in Bristol, or managing payroll for a dozen clients as an accountant, this guide will give you a clear, practical understanding of each document and what you need to do.
What Is a Payslip and What Must It Include?
A payslip is a written statement of an employee's pay for a given pay period — weekly, fortnightly, or monthly. Under the Employment Rights Act 1996, as amended by the Employment Rights (Miscellaneous Amendments) Regulations 2019, you must provide a payslip to every employee and, crucially, to every worker (including zero-hours workers) on or before their pay date.
The minimum information a payslip must show is:
- Gross pay — the total amount before any deductions
- Net pay — the amount the employee actually receives
- Any fixed deductions (such as a salary sacrifice arrangement), with a description of their purpose
- Any variable deductions, such as income tax and National Insurance contributions
- Where pay varies by hours worked, the number of hours being paid
There is no legal requirement to show the employee's name or their tax code on a payslip — but including them is best practice and reduces queries from staff. You can issue payslips electronically, provided the employee can access and save them. Many employers now send PDF payslips via email or through a payroll portal, which is perfectly acceptable to HMRC.
One common pitfall for small employers is confusing gross pay with taxable pay. Pension contributions made under a salary sacrifice arrangement, for example, reduce taxable pay before National Insurance is calculated. Your payslip must reflect this accurately, or you may inadvertently under-deduct NI — a problem that tends to surface during HMRC compliance checks.
The P45: What It Is and When to Issue It
A P45 is issued when an employee leaves your employment. It summarises their pay and tax deductions from the start of the current tax year (6 April) to their leaving date. HMRC requires you to issue a P45 to the departing employee without delay — ideally on their last day or with their final payslip.
The P45 has four parts:
- Part 1 — sent electronically to HMRC via your Full Payment Submission (FPS) or a separate notification
- Part 1A — the employee keeps this for their own records
- Parts 2 and 3 — the employee gives these to their new employer, who uses them to set up the correct tax code straight away
If you fail to issue a P45 promptly, the employee's new employer will have to place them on an emergency tax code (often 1257L W1/M1), which can result in the employee paying more tax than they should — at least temporarily. That creates a poor impression and may generate a formal complaint.
It is worth noting that you cannot issue a P45 to an employee who is also receiving a pension from you. In that scenario, different rules apply, and you should contact HMRC for guidance. Similarly, if an employee dies in service, you must issue a P45 using their date of death as the leaving date and follow specific procedures for any outstanding pay owed to their estate.
The P60: Annual Obligations Every Employer Must Meet
At the end of every tax year — on 5 April — you must issue a P60 to every employee who is still on your payroll. The deadline for providing P60s is 31 May following the end of the tax year. So for the 2024–25 tax year, P60s must be in your employees' hands (or inboxes) by 31 May 2025.
A P60 summarises the employee's total pay and deductions for the entire tax year, including:
- Total gross pay
- Total income tax deducted
- National Insurance contributions (employee and, optionally, employer)
- Student loan deductions, if applicable
- The employee's final tax code for the year
Employees need their P60 for a variety of purposes: completing a Self Assessment tax return, applying for a mortgage, claiming a tax refund, or verifying their income for a rental application. Failing to issue one — or issuing one with incorrect figures — can cause real-world harm to your staff and, in turn, damage to your reputation as an employer.
You are not required to send a P60 to HMRC directly. The information is already submitted throughout the year via your Real Time Information (RTI) Full Payment Submissions. The P60 is purely for the employee's benefit.
RTI, FPS and EPS: The Compliance Framework Behind the Documents
P60s, P45s and payslips do not exist in isolation — they sit within the broader Real Time Information (RTI) framework that HMRC introduced in 2013. Under RTI, you must submit a Full Payment Submission (FPS) to HMRC on or before each pay date, reporting every payment made to every employee. If you make no payments in a tax month, you should submit an Employer Payment Summary (EPS) to inform HMRC.
These submissions are what keep your PAYE records current with HMRC. If your FPS data is inaccurate — perhaps because you have entered a wrong National Insurance number or used the wrong tax code — the figures on your P60s and P45s will also be wrong. Errors discovered after the tax year ends can require amended submissions and, potentially, repayment of tax or NI.
Platforms like BizHub365 handle RTI submissions directly via HMRC's API, meaning your FPS and EPS are sent automatically when you run payroll — with no need for bridging software or manual uploads. P60s and P45s are generated from the same underlying data, which significantly reduces the risk of discrepancies between what you have reported to HMRC and what you hand to your employees.
Common Mistakes and How to Avoid Them
Even experienced employers make payroll errors. Here are the most frequent problems and how to sidestep them:
- Issuing a P60 to a former employee. You only issue a P60 to employees still on your payroll on 5 April. A former employee should have received a P45 when they left.
- Missing the 31 May P60 deadline. Diarise this date well in advance. If you use payroll software, set a reminder in mid-April to generate and distribute P60s promptly.
- Incorrect tax codes on payslips. Always action PAYE coding notices (P6 and P9 forms) from HMRC promptly. Using an out-of-date tax code is one of the most common causes of employee underpayments.
- Failing to issue payslips to workers (not just employees). Since April 2019, all workers — including casual and zero-hours staff — are entitled to a payslip. Many small employers are still unaware of this change.
- Not retaining payroll records. HMRC requires you to keep payroll records for at least three years after the tax year they relate to. These records include payslips, P45s issued, and the data behind your FPS submissions.
Conclusion: Getting Payroll Documents Right Protects Your Business
P60s, P45s and payslips may feel like administrative routine, but they represent your employees' financial records and your compliance standing with HMRC. Issue them accurately and on time, and you project professionalism and legal competence. Get them wrong, and you risk penalties, staff complaints, and the headache of correcting historical errors mid-year.
The practical takeaway is simple: use payroll software that integrates directly with HMRC's RTI systems, keep your employee records meticulously up to date, and build your payroll calendar around the key statutory deadlines — particularly the 31 May P60 deadline. If you are looking for an all-in-one solution, BizHub365 covers payroll, RTI submissions, P60 and P45 generation, and auto-enrolment support in one place, purpose-built for UK small businesses and their accountants. Visit bizhub365.co.uk to find out more.