What is Pay As You Earn (PAYE) in UK
In the world of UK taxation, the term PAYE holds significant importance. Standing for Pay As You Earn, PAYE is a system that governs the collection of income tax from employees’ earnings. This article aims to demystify PAYE, providing a clear understanding of its workings, calculations, and implications on various financial scenarios. What is PAYE? PAYE , or Pay As You Earn, is a system implemented by HM Revenue and Customs (HMRC) in the United Kingdom to ensure the smooth and timely collection of income tax from individuals. It is the primary method through which employees’ income tax and National Insurance contributions are deducted directly from their paychecks. How the Pay As You Earn System Works The PAYE system operates on a straightforward principle: taxation is deducted directly from an employee’s salary or wages before they receive their pay. Employers play a crucial role in this process, acting as intermediaries responsible for withholding the appropriate amount and forward