PAYE
Pay As You Earn — the system by which employers deduct income tax and National Insurance directly from employees' wages before paying them, and remit the deductions to HMRC on their behalf. Your employer uses your tax code to calculate how much tax to deduct each pay period. PAYE means most employees do not need to submit a Self Assessment tax return unless they have additional untaxed income.
Related Terms
Tax Code
A code issued by HMRC to your employer to tell them how much income tax to deduct from your pay each period.
National Insurance
A system of compulsory contributions paid by employees, employers, and the self-employed that funds state benefits including the State Pension, Statutory Sick Pay, and Maternity Pay.
Self Assessment
The system by which individuals report their own income, gains, and reliefs to HMRC each year through an online or paper tax return, rather than having tax collected automatically under PAYE.
P60
An annual certificate your employer gives you at the end of the tax year (by 31 May) summarising your total pay and total tax deducted under PAYE for the year.
P45
A form your employer gives you when you leave a job, showing your tax code, total pay, and total tax paid in the current tax year up to your leaving date.
P11D
A form employers must submit to HMRC to report the cash equivalent of benefits in kind and expenses provided to employees and directors that are not put through payroll.
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