Reporting Employment Income on Your Tax Return

Introduction

If you're employed and need to complete a Self Assessment tax return, you must report all your employment income accurately. This includes your salary, bonuses, tips, and taxable benefits, using information from documents like your P60 and P45 to fill in the employment pages correctly.

When You Need to Report Employment Income

Even though your employer deducts tax through PAYE (Pay As You Earn), you still need to report employment income on a Self Assessment return if you:

• Are self-employed and also work as an employee
• Are a company director
• Have other untaxed income
• Receive certain employment benefits
• Need to claim tax relief for job expenses

Your tax return brings together all your income sources so HMRC can calculate your total tax liability for the year.

Understanding Your P60 and P45

Your P60 is an end-of-year certificate that shows your total pay and deductions for the tax year (which runs from 6 April to 5 April). Your employer must give you this by 31 May each year. This document contains the key figures you need to complete the employment section of your tax return.

A P45 is given to you when you leave a job. It shows your pay and tax deductions up to your leaving date. If you've had multiple jobs during the tax year, you'll need P45s from jobs you left and a P60 from any job you still hold at the end of the tax year.

What to Include in the Employment Section

You must report all employment income, which includes:

• Your salary or wages
• Bonuses and commission
• Tips and gratuities
• Taxable expenses payments from your employer
• Taxable benefits (such as company cars, private medical insurance, or interest-free loans)

Reporting Taxable Benefits

As an employee, you may receive benefits from your employer that count as taxable income. Your employer reports these on a form P11D, which you should receive after the end of the tax year. Common taxable benefits include company cars, fuel, accommodation, and private medical insurance. You need to include the cash equivalent value of these benefits in your tax return.

Claiming Tax Relief for Job Expenses

You can claim tax relief for certain expenses you've paid for yourself that are necessary for your job. These might include:

• Professional fees and subscriptions
• Travel expenses for business (not your normal commute)
• Tools and equipment needed for your work
• Uniforms and specialist clothing

When completing your tax return, you report these expenses in the employment section to reduce your taxable income. Keep records and receipts to support any claims.

HMRC Helpsheets for Complex Situations

HMRC provides detailed helpsheets to help you complete the employment section if your situation is more complex:

Living accommodation (HS202): If your employer provides you with living accommodation, you may need to pay tax on this benefit. This helpsheet explains how to calculate the taxable amount.

Non-taxable payments or benefits (HS207): Some payments and benefits are not taxable. This helpsheet helps you identify which ones you don't need to report.

Payments in kind and asset transfers (HS213): If your employer gives you goods or transfers assets to you, this helpsheet explains how to work out the taxable value.

Capital allowances and balancing charges (HS252): If you're claiming for equipment like plant, machinery, or cars used for work, this helpsheet covers capital allowances including disposal of equipment and accounting periods that differ from the tax year.

Seafarers' Earnings Deduction (HS205): If you work on ships (but not other offshore installations), you may qualify for this special deduction that reduces your taxable income.

Employment, residence and domicile issues (HS211): If you're not a UK resident, use this helpsheet to calculate which parts of your employment income are not liable for UK Income Tax.

Tax equalisation (HS212): This helpsheet is for employees whose employers use tax equalisation arrangements, providing specific instructions for completing the employment section.

Student and Postgraduate Loan Repayments

The employment section of your tax return also deals with student loan and postgraduate loan repayments. Your P60 shows deductions already made through PAYE, but your Self Assessment calculation will determine if you owe additional repayments based on your total income from all sources.

Record Keeping

Keep all relevant documents for at least 22 months after the end of the tax year they relate to (or longer if you file late). This includes:

• P60s and P45s
• P11D forms showing benefits
• Payslips
• Receipts for expenses you're claiming
• Records of tips received

Getting Help

HMRC provides a YouTube video that walks through completing the employment section of your online tax return, covering record keeping, filling in your return, tax relief for employment expenses, and loan repayments.

Sources

• Help with employment on your Self Assessment tax return

This article provides general guidance based on current HMRC rules. For advice specific to your situation, speak to your accountant.