GlossaryUK
What is PAYE?
Pay As You Earn — collecting tax and National Insurance through payroll
Short answer
PAYE is HMRC’s system for employers to collect Income Tax and National Insurance from employees’ pay through payroll and pass it to HMRC.
Explained
A company registers as an employer if it will pay an employee or director above a set level, or provide expenses or benefits, even if the only employee is its own director. Registration happens before the first payday but no more than 2 months before you start paying people.
Each payment is reported to HMRC on or before payday, and deductions are usually paid to HMRC monthly, or quarterly for small employers.
Good to know
- Registration thresholds can change each tax year.
- Payments to directors living abroad need their tax position considered separately.
This page is general information, not legal or tax advice. Rules change; check the official source for the latest position or talk to us.
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