Pay As You Earn (PAYE)

Pay As You Earn (PAYE) is a system where employers deduct income tax and National Insurance contributions directly from an employee's salary or wages before paying them. This deducted amount is then sent to the government on the employee’s behalf. PAYE simplifies tax management for individuals, ensuring taxes are paid regularly throughout the year instead of in a lump sum at year-end. It also helps maintain steady government revenue and ensures compliance with tax regulations by automating the collection process.