Pay As You Earn (PAYE): In-depth

Summary

The Pay As You Earn (PAYE) system is a collection mechanism which aims to collect the tax due for the tax year on various types of employment income (including wages and salaries) by making a deduction on account of tax each time an employee is paid. The amount deducted must be paid over to HM Revenue & Customs (HMRC). The PAYE system imposes various compliance obligations on employers.

This topic contains advice on how to set up a PAYE scheme, details on the tax rates and allowances for 2020/21 and explains the information that employers need to provide to HMRC under Real Time Information (RTI).

In Practice