What is PAYE?
PAYE (Pay As You Earn) is the HMRC system for collecting income tax from the pay of employees, and Directors, as they earn it. It also incorporates the payment of Statutory Sick Pay, Statutory Maternity Pay and Student Loan Deductions. HMRC provide tax and NIC tables to ensure that employers deduct the correct levels of both throughout the tax year Employees receive a tax code from HMRC. This code tells their employer how much the employee can earn in the tax year before they start paying tax. Income Tax and National Insurance deducted from employees plus the National Insurance contributed by the employer must be paid over to HMRC monthly. Each Company receives a PAYE Remittance Booklet directly from HMRC and this must be used to make all PAYE payments. PAYE Payments and the appropriate payment slip from the Remittance Booklet must be sent to HMRC as per the remittance booklet deadlines. Interest may be charged if the payment is not received by this date.
