PAYE – Pay As You Earn

PAYE is the method of paying Income Tax and National Insurance (NI) contributions. Employers deduct tax and NI contributions from employees' wages or pension (depending on the pension) before paying you your wages or pension.

Your records must show accurate reporting - kept for 3 years (most companies keep 6 years records) from the end of the related tax year. HMRC may check your records to ensure you are paying the right amount of tax. There are different rules for keeping records to prove you have paid the correct minimum wage.

If you do not keep full records, HMRC may estimate what you have to pay and charge you a penalty of up to £3,000.

New employer

To set up a Pay As You Earn (PAYE) scheme with HMRC, you must contact the New Employer Helpline on 0300 200 3211 or register online via https://www.gov.uk/register-employer.

Existing Employer

As an employer you are responsible for operating PAYE and National Insurance (NI). You may also need to make statutory payments from time to time, of which you need to be aware. You can find out more at www.gov.uk/paye-for-employers.