Running payroll for even a small team means keeping on top of several legally required documents. P60s, P45s, and payslips might sound like bureaucratic alphabet soup, but each one serves a distinct purpose — and getting them wrong can mean HMRC penalties, disgruntled employees, and a compliance headache you simply do not need. Whether you employ two people or twenty, this guide explains exactly what each document is, when you must issue it, and what it must contain.
What Is a Payslip and When Must You Provide One?
A payslip is a written statement of an employee's pay for a given pay period. Under the Employment Rights Act 1996 (as amended by the Employment Rights (Miscellaneous Amendments) Regulations 2019), every employer in the UK must provide a payslip to all workers — not just employees — on or before their pay date. That includes part-time staff, zero-hours workers, and agency workers on your books.
A compliant payslip must show:
- Gross pay — earnings before any deductions
- Net pay — the amount actually paid after deductions
- Variable deductions itemised individually (e.g. income tax, National Insurance contributions)
- Fixed deductions either itemised or shown as a total, provided you have given the employee a written standing statement of those deductions beforehand
- The number of hours worked, where pay varies by hours (a requirement added in April 2019)
Payslips can be paper or electronic. Most modern employers opt for digital payslips, which is perfectly acceptable as long as the employee can access and save them. Failing to issue payslips at all — or issuing incomplete ones — is a breach of employment law. Employees can take the matter to an employment tribunal, which can order you to pay back any unnotified deductions made in the preceding 13 weeks.
The P60: Your End-of-Year Summary Certificate
A P60 is an annual summary of an employee's total pay and deductions for the tax year — running from 6 April to 5 April the following year. You must issue a P60 to every employee who is on your payroll on the last day of the tax year (5 April). Employees who leave before that date do not receive a P60 from you; they get a P45 instead (more on that below).
The deadline for issuing P60s is 31 May following the end of the tax year. So for the 2024–25 tax year ending 5 April 2025, you must hand P60s to eligible employees by 31 May 2025. Miss this deadline and HMRC can charge a penalty of up to £300 per form.
A P60 must include:
- Employee's full name and National Insurance number
- Total gross pay for the year
- Total income tax deducted under PAYE
- Total employee National Insurance contributions
- Any statutory payments (e.g. Statutory Maternity Pay or Statutory Sick Pay)
- The employer's PAYE reference number
- Tax code in use at the year end
Employees need their P60 to complete a Self Assessment tax return, claim a tax rebate, apply for a mortgage, or provide proof of income. It is worth reminding your staff to keep it safe — HMRC considers it a primary income document. As an employer, you are not legally required to keep copies of P60s you issue, but it is good practice to retain them for at least three years in case of a PAYE audit.
The P45: What Happens When an Employee Leaves
When an employee leaves your employment — whether through resignation, redundancy, dismissal, or retirement — you must issue them a P45. There is no statutory deadline framed as a number of days, but HMRC guidance is clear: the P45 should be provided on the employee's last day of work or as soon as reasonably practicable thereafter. Delays cause real problems; without a P45, their new employer may have to place them on an emergency tax code, which usually means they pay too much tax in their first few weeks.
A P45 is split into four parts:
- Part 1 — sent directly to HMRC (now done automatically via RTI software when you submit your final Full Payment Submission for that employee)
- Part 1A — kept by the employee for their own records
- Part 2 — given to the new employer
- Part 3 — also given to the new employer, who sends it to HMRC
In practice, since the introduction of Real Time Information (RTI) reporting, much of the P45 process is handled automatically through payroll software. When you process a leaver, your software notifies HMRC via a Full Payment Submission (FPS) or Employer Payment Summary (EPS), and generates the employee-facing parts of the P45 for you to distribute.
Key information on a P45 includes the employee's leaving date, their tax code on departure, total pay to date in the tax year, and total tax deducted to date. Getting these figures right is critical — errors here roll forward into the employee's new payroll record and can cause over- or under-taxation that takes months to unravel.
Common Mistakes UK Employers Make — and How to Avoid Them
Even well-intentioned employers slip up in predictable ways. Here are the most common pitfalls to watch out for:
- Missing the P60 deadline. Put 31 May in your calendar as a hard deadline every year. Do not wait until the last week — payroll software should let you generate and distribute P60s within days of the tax year ending.
- Issuing P60s to leavers. Only employees on your payroll on 5 April receive a P60. Employees who left during the year should have already received their P45.
- Incorrect tax codes on P45s. Always double-check the tax code before processing a leaver. If you have received an updated tax code notice from HMRC but have not yet applied it, do so before issuing the P45.
- Payslips that omit hourly breakdowns. Since April 2019, if an employee's pay varies by the number of hours worked, the payslip must state those hours. Many small employers overlook this for casual or zero-hours staff.
- Storing sensitive payroll data insecurely. The ICO's guidance under UK GDPR is clear: payroll records containing National Insurance numbers and bank details must be stored securely and retained for no longer than necessary — typically six years for HMRC purposes.
Platforms like BizHub365 handle much of this automatically. Its RTI-compliant payroll module generates payslips, P60s, and P45s directly from your pay runs, submits FPS and EPS files to HMRC in real time, and keeps an auditable record of every document issued — reducing the risk of the errors above significantly.
Keeping Records and Staying Audit-Ready
HMRC can inspect your PAYE records at any time, and inspections can cover the previous four to six years. As a minimum, you should retain:
- Details of every payment made to employees, including gross pay, deductions, and net pay
- Tax codes and National Insurance categories used for each employee
- Records of statutory payments (SMP, SPP, SAP, SHPP)
- All RTI submissions made to HMRC
- Copies of P45s issued to leavers
Keeping these records in a single, searchable system saves enormous time when HMRC comes knocking. Cloud-based payroll software that integrates directly with your accounting records — so that payroll journals post automatically and your bank reconciliation stays clean — is the most efficient way to manage this for a small business.
Conclusion
P60s, P45s, and payslips are not optional extras — they are legal obligations that sit at the heart of your employer responsibilities under UK employment and tax law. Issue payslips on time and in full, distribute P60s by 31 May each year, and get P45s to leavers promptly. Keep accurate records, apply the correct tax codes, and store data securely in line with UK GDPR requirements.
If you are managing payroll manually or with a spreadsheet, the administrative burden quickly adds up — as does the risk of error. A purpose-built platform like BizHub365 can automate the generation and distribution of these documents, submit RTI filings directly to HMRC without bridging software, and give you a clear audit trail at every step. Getting payroll right from the start protects your business, your employees, and your relationship with HMRC.