WHAT IS THE PAYE SYSTEM?
PAYE (Pay As You Earn) is the taxation system used by HM Revenue and Customs to directly collect Income Tax and National Insurance Contributions (NICs) from employees’ payments and benefits on a regular basis. The PAYE system stipulates how employers have to deduct tax and NICs from their employees’ pay and transfer it to HMRC. The deductions made under the PAYE system are held on an employee’s account to be set off against his liabilities resulting from Income Tax and Class 1 NICs.
If you are an employer you have certain obligations under PAYE to meet, which are:
- To register with HM Revenue and Customs as an employer – See for more details Registering as an employer.
- To establish if you have to apply the PAYE system – See for more details What are PAYE Payments?
- To operate the PAYE system on the payments to your employees – See for more details Employer’s obligations under PAYE.