PAYE or Pay As You Earn is a system of collecting taxes from
employment income during a tax year. This is applicable to employed
individuals, those receiving a pension from former employers, those
with an annuity paid under a pension plan or a combination of
pension and annuity, and for individuals with income liable for
How often tax is taken, depends on the frequency with which you
are paid, whether weekly, monthly, quarterly or annually. Employees
are liable for tax whether employed part-time, full-time or on a
How much tax will be deducted from your earnings?
The amount depends on the tax code provided by HMRC. The tax
agency will issue a PAYE code to your employer, so they will know
how much tax to take off your income. The same code will tell you
how your tax code is worked out, and will be outlined in the PAYE
coding notice (form P2).
If you don’t understand, or want to know more about your PAYE
code, don’t hesitate to ask HMRC for more information.
Exercise prudence & vigilance with tax deductions
It is important that you check your PAYE coding notice to ensure
that you’re paying the correct amount of tax. Again, refer to HMRC
for any clarification.
Always check your payslip for any discrepancies in your pay
before and after tax, your NIC, and any student loan repayment
deducted from your income. You should also make sure that your
employer is using the correct tax code, which should show on your
Think you may be due a tax refund? Apply here to get
your tax back.