Credit Score Basics > P45 vs P60: which one do you need?

P45 vs P60: which one do you need?

Wollit Team2 minute read · Updated 11th August 2024

In the UK, when you work for an employer, you will come across two important tax forms: the P45 and the P60.

Both of these give details about your earnings and the tax you have paid, but they are used in different situations. Here is how they work, and which form to use in which situation.

What is a P45?

A P45 is a form that your former employer gives you when you leave a job. It shows how much money you earned and how much tax you paid during the current tax year (from April 6 to April 5) up until the day you left your job.

Your new employer will use the information on your P45 to figure out your tax code and make sure you pay the right amount of tax.

What is a P60?

A P60 is a form that your current employer gives you at the end of each tax year (on April 5). It shows your total earnings and the total amount of tax you paid during that entire tax year. Your employer must give you a P60 by May 31 each year, either as a paper copy or via email. It’s a good idea to keep your P60 for at least six years, as you might need it later.

What are the differences between a P45 and a P60?

Here are the main differences between a P45 and a P60:

A P45 is given when you leave a job, while a P60 is given at the end of the tax year.
A P45 shows your earnings and tax payments up to your leaving date, while a P60 shows your total earnings and tax payments for the whole year.
A P45 helps your new employer know how much tax you have already paid, while a P60 is a record of your annual income and tax.

When do you need a P45 and a P60?

Both the P45 and the P60 are important for keeping track of your finances and making sure you pay the right amount of tax.

A P45 is important because it tells your new employer how much tax you have already paid this year, so they can calculate your tax code correctly. If you have paid too much tax, your new employer can help you get a refund.

A P60, on the other hand, is important because it shows your total earnings and tax payments for the whole year. This can come in really handy when you are applying for a loan or mortgage.

However, you should keep in mind that your income is only a part of the equation when getting approved for credit. Banks and lenders also need to see that you have a good credit history and that you’re a reliable borrower.

Luckily, now there are many apps that can help you build and improve credit.

One such app is Wollit. Wollit is an app available both on Android and iOS, and it works by reporting a fixed-fee monthly subscription as a loan repayment to all three credit reference agencies. This helps you build your credit history and directly influences your credit score.

On top of this, Wollit can also report your monthly rent payment to Experian. This can add another line in your credit report that shows lenders that you’re reliable and pay your bills on time, helping you make the most of your rent while you prepare to become a homeowner.