Small Business Tax Dictionary

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PAYE (Pay As You Earn) - UK

Pay As You Earn (PAYE) is the United Kingdom's system for collecting income tax and National Insurance contributions directly from employees' wages or salaries. Employers calculate and deduct the required amounts before paying employees, remitting the withheld funds to HM Revenue and Customs (HMRC). PAYE ensures a steady collection of tax throughout the year and reduces the administrative burden on employees. Compliance with PAYE regulations is essential for UK employers, ensuring accurate and timely tax collection, supporting employee financial management, and maintaining legal compliance.