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Business
PAYE
Pay As You Earn — the system where employers deduct income tax and National Insurance from employees' wages.
PAYE makes tax collection easy for the government. Employers must register, run payroll correctly, and submit RTI (Real Time Information) reports. Mistakes can lead to penalties and employee complaints.
It's the automatic tax collector built into every salary slip.
Real world: An employer pays an employee £3,000 gross salary. PAYE deducts tax and NI before the employee receives the net amount. The employer then pays the deducted tax to HMRC every month.
💡 PAYE is the main way most people pay income tax — and employers handle the hard work.