PAYE
UK tax glossary · Last reviewed: April 2026
Pay As You Earn (PAYE) is the system HMRC uses to collect Income Tax and National Insurance from employment. Your employer calculates deductions each pay period using your tax code and remits the money to HMRC on your behalf.
Most UK employees never file a tax return for their salary because PAYE handles it automatically. You still may need Self Assessment if you have other untaxed income, such as rental income over £1,000 or savings interest above your personal savings allowance.
PAYE runs on a cumulative basis by default — each payslip accounts for total earnings and tax paid since 6 April, so any over- or under-deduction in earlier months is smoothed out.
Worked example
Salary: £35,000. Personal Allowance: £12,570. Taxable pay: £22,430. Income Tax: £22,430 × 20% = £4,486. Employee NI: (£35,000 − £12,570) × 8% = £1,794.40. Total PAYE deductions: ~£6,280/year, or roughly £523/month.
Common questions
Can I get a PAYE refund without filing a Self Assessment return?
Yes. If HMRC calculates you have overpaid, they usually issue a P800 notice and refund automatically, or you can claim through your Personal Tax Account.
What happens to PAYE if I have two jobs?
Your Personal Allowance is applied to your main job. The second job is typically coded BR (20% on everything) or D0/D1 for higher-rate taxpayers, ensuring no double allowance is given.
Related resources
TaxHelper provides general information based on published HMRC rates and guidance. It is not regulated financial or tax advice. For decisions involving significant sums, complex circumstances, or if you are unsure, speak to a qualified accountant or HMRC directly.