Emma Richardson, Independent Financial Adviser at Active Financial Planners Ltd gives her tips on why keeping your payslips can be so important.
Many of us eagerly wait for our payslips to arrive every month (or week), but how many of us actually keep them?
Here at Active Financial Planners, our payslips are emailed, which is a great way to keep hold of them (and helps us to limit paper waste!).
First and foremost, your payslip contains essential, and potentially obvious information such as gross and net pay and how much tax you pay. It is however essential that you check the details on your payslip, including tax codes and any deductions (you may have) to ensure everything is correct and up-to-date.
HM Revenue & Customs (HMRC) recommends you keep your payslips for as long as possible. Understandably, this may seem like a huge task as you are likely to be in employment for 40 years plus. However, it is advisable to keep all payslips for as long as you have made pensions contributions to show that you’ve been paying into your retirement pot. If you do have gaps (in your payslips), then make sure you keep your P60s at the end of each tax year.
More reasons to keep your payslips are:
Payslips have all the relevant information you need to complete your tax return; making things much easier for yourself or your tax adviser when due.
Renting a flat or applying for a mortgage
A pay slip provides proof of your earnings, which is something that you must have when applying for a Mortgage or looking to rent a property.
Queries on your pay
Another obvious one, but your payslip is proof of what you earn, and you may have to show proof of pay when applying for a loan or other financial products.
Proof of pensions deductions
Unlike income tax (which is overseen by HMRC), pension contributions aren’t monitored, meaning our payslips (not the P60) are the only acceptable evidence of past (pensions) payments. Failure to show these may result in you receiving less than you contributed. They can be vital when calculating top-ups to your pension.
Proof of memberships and subscriptions
For example, memberships to gyms or for credit unions.
Visa applications for overseas travel
Certain countries are very strict about how much you need to earn in order to visit them, even if it is for just for a few months. If you know you have a work-trip or long holiday coming up, you may need your payslips as proof of salary.
You will need your payslips to calculate entitlements.
Prove loss of earnings
If you’re involved in an accident and seek compensation, you will need your payslips as proof of what you will lose in earnings, as well as other deductions.
Benefits in kind
From April 2018 you will pay tax (on benefits in kind) via PAYE (Pay as you earn) on a monthly basis, rather than seeing an adjustment to your tax code the following year.
Are you self-employed? If so, you should make particular effort to keep all relevant information of jobs and contracts. HMRC is under no obligation to provide you with this information (should you request it), even if you send in a written request, so it’s in your best interest to keep hold of your payslips, for as long as possible.
As you can see from the points made above, there are many aspects of a Payslip that may be used when planning your finances and in almost all instances, the more accurate the information we receive, the better (or more accurate) our advice will be. This is surely an incentive in itself?
This is a Financial Promotion. The content of this blog is for information only and must not be considered as financial advice. We always recommend that you seek independent financial advice before making any financial decisions.
Call your adviser at Active Financial Planners today on 01642 765957 or visit the website