Why you should keep hold of your payslips
Many of us anxiously wait for payslips to arrive each month or each week, but how many of us actually hold on to them?
The payslip is more than just your financial bail-out at the end of the month. It contains essential information such as net pay, the pay you actually take home after deductions, how many days of holiday pay you have left as well as crucial tax information.
It is essential to regularly check your payslip, including tax codes and any deductions you may have to ensure everything’s up-to-date.
HM Revenue & Customs (HMRC) recommends you hold on to your payslips for as long as possible. Understandably, this may seem like a mammoth task for the average worker as you are likely to be in employment for over 40 years.
However, it is advisable to at least keep all payslips for as long as you have made pensions contributions to prove that you have been paying into your retirement pot. If you have gaps in your payslips, make sure you keep hold of your P60s at the end of each tax year.
Here are a a few other reasons to hold onto your payslip…
• Tax returns – payslips have all the relevant information you need to fill out the dreaded tax return: make life easier and use them. The deadline to submit the tax return and make payment is 31 January.
• Renting a flat or applying for a mortgage as proof of earnings – we’ve all been there. That last mad dash to find all the right payslips to prove we can afford to live in that dream home.
• Queries on your pay – this one is obvious, but there is no better document to prove what you earn than your payslip. For example, you may have to prove your pay when applying for a loan or for other bank products.
• Proof of pensions deductions – unlike income tax which is overseen by HMRC, pension contributions are not monitored and payslips (not the annual P60), are the only acceptable evidence of past payments. Failure to show these might result in you getting paid less than you contributed.
• Proof of union membership and subscriptions – for example credit unions or gyms.
• Visa applications for overseas travel – some countries are really strict about how much you need to earn in order to visit, even if it is for just a few months. If you know you have a work-trip or long vacation coming up, it’s essential you collect and keep your payslips safe.
• Maternity leave – to calculate entitlements you’ll need your payslips.
• Prove loss of earnings – if you are involved in an accident and seek compensation, you’ll need the payslips to prove just what you will lose in earnings plus what other deductions you will be paying out and cannot because you are unwell.
• Benefits in kind – these will be payrolled in from April 2018 so you will pay tax via PAYE on a monthly basis rather than see a tax code adjustment to the following year’s code.
Self-employed people should make particular effort to hold on to all relevant information of jobs and contracts taken out. HMRC is under no obligation to provide you with the information should you request it, even if you send in a written request, so it is in your best interest to keep your payslips for as long as possible.