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A Glossary of HM Revenue & Customs, Tax Codes & some of the ‘P’ forms Terms

HM Revenue & Customs (HMRC)

HM Revenue & Customs (or HMRC) was created by the merger of the Inland Revenue and Her Majesty’s Customs and Excise in 2005. It deals with the collection of tax, national insurance contributions and VAT.

Tax code

Each employee has a tax code to specify the way that PAYE income tax should be calculated and deducted from their wages. If an employee has more than one job, they can have a different tax code for each.

P6: Tax code notice

P6 tax coding notices are issued to employers by HM Revenue & Customs to show tax code changes for their employees. They are usually generated by HMRC where they have reviewed an employee’s tax record & current situation or after receiving a completed P46 from the Employer.

P38S: Student Employees

A form issued to Students for work done in holiday periods only which allows a maximum gross pay (£6035 in 2008-2009) to be paid during those holiday periods, worked in any one year, without tax being deducted. National Insurance deductions are still made.

P45: Details of Employee Leaving Work

A P45 is a form that is completed by an employer and given to an employee when they leave. The employee should then give the P45 to their new employer when they start a new job. The new employer uses the information from the P45 to ensure that the correct amount of tax is deducted.

P46: Employee without a Form P45

If an employee does not have a form P45 or has lost it, the employer can fill out a form P46 instead.

P14 – End of Year Summary

The P14 is submitted to HM Revenue & Customs at the end of each tax year for each employee. The P14 includes the gross pay and deductions for tax & National Insurance.

P35 – Employer Annual Return

The P35 lists the total deductions for tax & National Insurance for all employees made by the employer during the tax year. The P35 includes the employer’s certificate and declaration that the information provided is complete & truly stated. The P35 accompanies the P14 – End of Year Summaries and is submitted to HM Revenue & Customs at the end of each tax year.

P 60: End of Year Certificate

At the end of each tax year, employers must give a P60 to each of the employees who were working for them at the end of the year. A P60 includes totals of the pay, tax and national insurance accumulated during the tax year.

P11D

Employers must use a P11D to tell HMRC about the value of any benefits in kind they've given to employees, including directors, who earned over £8500 during the tax year. This means benefits or expenses that effectively increase an employee’s income - such as a company car, private medical insurance or interest free loans. The employee pays tax on most benefits whilst the employer pays Class 1A National Insurance Contributions. A copy of the P11D must be provided to each employee affected, as this will be needed by them if they need to complete a self-assessment tax return. The P11D will generally be accepted by banks and building societies as proof of extra income for a loan or mortgage.

P9D (Expenses payments and income from which tax cannot be deducted)

Employers must use a P9D to tell HMRC about the value of any benefits in kind they've given to employees, including some directors, who earned less than £8500 during the tax year. The employee does not pay tax on such expenses, and the employer does not pay Class 1A National Insurance Contributions. Employees affected will need a copy of form P9D in order to complete their end of year tax return.

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