The short version: PAYE (Pay As You Earn) is how employees pay Income Tax and National Insurance. Your employer deducts it from your wages before you receive them, so you never see the money. It just goes straight to HMRC.
How does it work?
Your employer uses your tax code to work out how much to deduct. The tax code tells them how much of the Personal Allowance to apply. Each pay day, they calculate your tax based on what you’ve earned so far that year.
What gets deducted?
Income Tax, National Insurance, and potentially student loan repayments, pension contributions, and other things depending on your situation. Your payslip shows the breakdown.
Do you need to do anything?
Usually no. If PAYE is working correctly and you have no other income, everything’s handled automatically. But if you have income from other sources, or your circumstances are complex, you might need to file a Self Assessment as well.
What if it’s wrong?
Check your tax code. If it’s wrong, you could be over or underpaying. Contact HMRC to get it corrected.
Think your tax code might be wrong? Let us check it for you.
