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Overview

PAYE


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Pay-as-you-earn. The UK scheme for collecting income tax and National Insurance contributions, under which the onus is placed on employers to collect the tax from their employees as payments are made to them. There is an elaborate system of administration to ensure that broadly the correct amount of tax is deducted week by week or month by month and that the employer remits the tax collected to HM Revenue and Customs very quickly. The amount of tax due is calculated using income tax codes and tax tables supplied to employers by the Revenue (now usually in the form of computer software). Although technically called pay-as-you-earn, the system would be better called ‘pay-as-you-get-paid’.

http://www.hmrc.gov.uk/paye/intro-basics.htm An introduction to PAYE for employers from the HMRC website


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