Pay As You Earn (UK)
Under Pay As You Earn (PAYE), an employer normally calculates and reports payroll deductions and pays HMRC under applicable rules. A tax code helps determine income tax deductions. PAYE can coexist with an individual Self Assessment obligation; deductions do not necessarily settle the final liability. Treatment and reporting requirements depend on the tax year, payment and circumstances.
Worked example
An employee is paid wages through payroll, which deducts PAYE income tax and relevant employee National Insurance before net pay is made.
Common mistake
Assuming PAYE deductions guarantee that no return or later adjustment is ever needed.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | TX (UK) | Direct | June 2026–June 2027 |