Your P60 is not your US wage figure: how to translate it properly

Figures relate to tax year 2025-26 (UK) · 2025 (US)

Your employer hands you a P60 in May. It carries a single pay figure and a single tax figure, and it looks exactly like the number an American return wants. It almost never is.

The P60 answers a British question about a British tax year. So this guide covers what the form actually reports, why the figures need rebuilding, and how to get from a P60 to a defensible US wage number.

Key takeaways

• A P60 covers 6 April to 5 April, while your US return covers January to December.
• The pay box is net of pension contributions taken under a net pay arrangement.
• Benefits in kind sit on a P11D, not on the P60, so the wage figure is incomplete.
• Tax deducted is PAYE for the year, which is not the same as your final UK liability.
• Student loan and National Insurance deductions are not creditable income taxes.
• Monthly payslips, not the P60, are the raw material for an accurate US figure.

What is a P60?

It is the end-of-year certificate your employer must give you after each British tax year. It shows total pay for the year, tax deducted under PAYE, and National Insurance contributions. Employers issue it by 31 May, and it exists so you can prove what payroll reported about you.

That purpose explains its limits. The form exists to close a British payroll year, not to feed a foreign return. Every mismatch below follows from that.

Why can a P60 not go straight onto a US return?

Because four things differ at once: the period, the definition of pay, the currency, and the meaning of the tax figure. Any one of them would matter on its own. Together they mean the number in the pay box is rarely the number your Form 1040 needs.

The tax year problem

Nine months of one British year and three months of the next make up your American year. That is the single largest source of error we see. A certificate for 2025-26 covers April 2025 to April 2026, so it straddles two US returns.

Bonuses make this sharper. A March bonus and an April bonus sit in the same British year but different American ones, and payroll has no reason to flag that for you.

Leavers meet the mirror image. A final payment made after you move can belong to a British tax year you no longer live in, while landing squarely inside an American calendar year you do.

The fix is mechanical rather than clever. Take the monthly payslips for January through December and add them up, which gives the period the IRS actually asks about.

The pension problem

Most British workplace pensions use a net pay arrangement, so contributions come out before tax is calculated. The pay figure is therefore already reduced by everything you put into the scheme. An American return generally starts from the gross figure instead.

Treaty relief can protect the contributions themselves, within limits, but that relief is claimed rather than assumed. Our guide to UK pensions on a US return covers how the treaty treats contributions and growth.

Salary sacrifice arrangements push the same money further out of sight. There the contribution never appears as pay at all, so neither the P60 nor the payslip gross shows it without checking the scheme documents.

The benefits problem

Company cars, private medical cover and similar perks never reach the form. They appear on a P11D, or through payrolled benefits, and they carry British values calculated by formula. America values several of them differently, and excludes some altogether.

So a wage figure built from that form alone understates income in most cases. Our guide to benefits in kind on a US return sets out which perks change value across the Atlantic.

What about the tax figure?

Treat it as a payment on account rather than a final liability. PAYE aims to collect the right amount across the year, but it misses in both directions, and a Self Assessment return often settles the difference months later. Foreign tax credits depend on the liability, not on the deduction.

The distinction matters when you elect to claim credits on an accrual basis. Per IRS guidance on the foreign tax credit, the year of accrual governs, so a balancing payment made in January can still belong to the earlier year.

National Insurance is a different creature again. It is a social security contribution rather than an income tax, so it does not generate a credit, though the totalization agreement usually prevents a second charge in America.

Payslip details that change the answer

Look past the gross figure. The lines for pension, share schemes, cycle schemes and childcare support all change what belongs in American wages. Several of them never appear on the annual certificate at all.

Share plans deserve particular care. A vesting event can count as pay in Britain and as something quite different in America, with its own timing and its own basis.

In our practice, the payslip is where cross-border errors surface. Summary documents look tidy precisely because they have already discarded the detail.

A worked example

The figures below are illustrative. Take an example: a P60 for 2025-26 shows pay of £78,000 and tax of £19,400, with £6,000 of pension contributions taken under a net pay arrangement and a company car reported separately.

The American return for calendar 2025 needs January to December pay instead. From payslips that comes to £74,500, before adding back pension where the treaty does not protect it.

Then the car arrives at its American value, not the British formula figure. The final wage number differs from the P60 by several thousand pounds, in both directions, before a single conversion has happened.

How do you rebuild the figures properly?

Start from payslips and work forward, using the certificate only to check your arithmetic. The goal is a calendar-year wage figure at American definitions, with a separate note of the British tax properly attributable to that period. Both numbers then support the return.

1. Collect twelve monthly payslips covering January to December, not the April to April set.
2. Total gross pay before pension deductions, keeping bonuses on their actual payment dates.
3. Add benefits at American values, taking the detail from the P11D or payrolled figures.
4. Add back employee pension contributions unless treaty relief clearly protects them.
5. Convert each month at a documented rate, or use a consistent annual average.
6. Work out the UK tax attributable to the same period, rather than copying the P60 figure.
7. Reconcile your calendar-year total back to the two P60s that overlap it.

What if you changed jobs during the year?

You will hold a P45 from the old employer and a P60 from the new one, and the P60 may already include the earlier pay. Check whether the figure is cumulative before adding the two together. Double counting a January to March period is the most common error in job-change years.

Keep both documents regardless. Where a new employer used an emergency code, the tax deducted can be materially wrong until a later correction, and the paperwork explains the gap.

A mid-year move between countries is harder again. Where employment starts or ends part way through, the split between British and American workdays drives the allocation, not the payslip layout.

What happens if HMRC refunds tax after you file?

The credit you claimed changes, so the American return may need amending. A repayment reduces the British tax properly attributable to that year, and the IRS expects to hear about it. A foreign tax redetermination carries its own notification obligation.

This arises most often after Self Assessment corrects PAYE. A repayment of £2,000 can turn a settled American year into one that needs revisiting.

The reverse happens as well. Paying more British tax later can increase your credit, which occasionally produces a refund on the American side.

Which British documents should you keep?

Five things, and none of them is enough alone. Twelve monthly payslips, both annual certificates that overlap the calendar year, the P11D or payrolled benefits statement, your pension scheme details, and any Self Assessment computation. Together they answer every question an American return asks.

Save them in the year you receive them rather than later. Employers change payroll providers, portals close, and old payslips are surprisingly hard to recover after a job move.

Digital copies are fine. What matters is that every figure can be traced from payslip to return without anyone guessing at a missing month.

What if you have no P60 at all?

Some people never receive one. If you left the job before 5 April, a P45 takes its place, and a director on a small payroll may hold neither. Payslips still exist in nearly every case, and they carry far more detail than either form does.

Where the payslips have gone too, ask payroll for a statement of earnings. Most providers can produce one quickly. That beats rebuilding a year from bank credits, which rarely separates pay from expenses.

Mistakes and penalties we see with P60 figures

• Reporting the P60 pay box as US wages, which imports a British tax year into an American return.
• Ignoring the pension add-back, which understates income and can overstate the exclusion claimed.
• Leaving benefits off entirely because they never appeared on the P60.
• Crediting PAYE rather than the actual UK liability for the period.
• Claiming credit for National Insurance, which is not an income tax.
• Converting the whole year at a single spot rate chosen after the fact.

None of these are exotic, and most are invisible until a notice arrives. An understated wage figure can support an accuracy-related penalty, and interest runs from the original due date once the correction lands.

Does any of this change if you claim the exclusion?

The wage figure still has to be right, because the exclusion applies to a number you must first calculate correctly. A wrong starting figure produces a wrong exclusion, and it can hide income that sits above the limit. Getting the P60 translation right therefore comes before any election.

The same applies to credits. Both routes start from the same wage number, and both fall apart when that number came straight from a British payroll form.

How US UK Tax Accountants helps

We rebuild wages from payslips as a matter of routine, then reconcile the result to the P60 so the workings stand up later. Our clients usually send twelve payslips, the P60 and the P11D, and we handle the rest. Where a year is missing, we chase the employer for a statement rather than estimating. If you have a drawer of British payroll paper and an American deadline, get in touch and we will turn it into your US federal return.

Last reviewed 20 September 2026. This article is general information and not personal tax advice. Payroll arrangements differ between employers, so check your own scheme documents before relying on any of it.