What is PAYE?

Pay As You Earn (PAYE) is HMRC's system for collecting Income Tax and National Insurance from employees' wages before the money reaches them. Employers deduct the correct amounts each pay period and transfer them to HMRC by the 19th (22nd if paying electronically) of the following month. PAYE also covers statutory payments such as Statutory Sick Pay and Statutory Maternity Pay. Any business hiring staff must register as an employer with HMRC and operate PAYE from the first payday.