What is PAYE?

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Pay when you make’ refers to income tax that is deducted from your pay prior to receiving it. In 1944, the system was introduced and is how the majority of employees pay their income tax. The money is paid to HMRC through your employer ‘at source’, which means directly from your salary before it is transferred to your account. National Student loan and insurance payments can be deducted in this manner. Another method of paying tax on income is through self-assessment which is where individuals fill out self-assessment tax forms and pay taxes every year, either once or twice.

Tax code and PAYE

The tax code for your PAYE is very important as it will let your source of income know the amount of tax you can take out of your earnings. Your tax department will inform your employer the tax code you have every tax year, or whenever there is an alteration in your circumstances. What is PAYE and how it works. The basic

HMRC will:

  • Calculate a tax code for you
  • Send you a PAYE code notice (a form called ‘P2’), if they have to and show you how they came up with taxes for your company. In cases where HMRC is not required to issue a coding notification, they can ask for one.
  • Tell your pension provider or employer the tax code you have (but not the way it was calculated).

The pension provider or employer is then able to use that tax code to calculate the amount of tax they will take from your monthly or weekly salary or retirement. They usually pay that tax (and National Insurance contributions, when appropriate) in full to HMRC. You can see your tax code as well as how it’s been determined on the HMRC website using Your Individual Tax Account.

Employers and pension providers follow procedures to run PAYE that permit them to apply tax codes when paying you. It is essential to ensure whether your pension provider or employer has been informing HMRC of your earnings. If you begin receiving new income, you should anticipate receiving an updated code notice from HMRC. If it doesn’t, we suggest that you contact HMRC and request one.


If you’re employed, you will receive an income tax return each time you receive a check. It could include the tax code that your employer employed to calculate the tax that is deducted from your salary. If you’re receiving pension funds, you usually are not issued a pay slip with every pension payment. However, you will receive some kind of notice in the event of any changes to your pension payment, such as if the tax code of your country changes. If you’re unsure if the code is used by your employer or pension provider Call and ask.

The tax year’s close

If you’re employed or have pensions on 5 April, which is the date of the close of the tax year , and pay taxes your pension provider will provide you with an “end of the calendar year’ certificate (form P60 or the same) on or before May 31. It will detail your salary or pension as well as the tax that was deducted, and typically the tax code in effect at the end of the year. The pension provider or employer will provide the same information to HMRC.


Are you eligible for a Tax rebate for PAYE?

Tax-paying through PAYE does not mean that you don’t have to pay taxes, therefore don’t think everything is in order or you could be paying for it. Every year, hundreds of thousands of UK taxpayers pay more income tax through PAYE with the help of a tax accountant. There are many reasons you may have paid tax over the limit and receive an income tax refund from PAYE.

The main reasons of having to pay too much tax are:

  • Do not claim back tax relief on expenses incurred as a result due to your work.
  • Tax code that is incorrect.
  • If you are a UK non-resident for tax reasons.

It is your obligation to ensure that you’ve not overpaid tax and, in the majority of cases, you’ll need to claim any tax you have paid in excess directly from the tax office , if you do not, you will not be able to get it back.


The tax year for PAYE is the year of tax

It is a PAYE tax year that starts on the 6th of April to the 5th April of the following year. There is a limit that spans four tax years to allow you to claim any excess income tax, so it’s important to know when your tax year begins and ends to ensure that you don’t have to miss the deadline.


Pay your tax and get your P60

Each financial calendar year (5 April) you’ll receive the form of a report, known as P60, from either your pension provider or employer which will show the total amount you’ve paid, the tax that was deducted, and the net amount you’ve earned after this. If you work for several employers and/or multiple pension providers each one of them should mail you an individual P60 Annual Certificate of End-of-Year. Examine all P60s you’ve received to confirm that you’ve paid the exact amount. If you believe you have paid too much tax Check the HMRC income tax checker service and then contact them to rectify your record.


Formularies for PayE

If you’re employed, the most frequent types of forms that you receive are:

  • P60 is a tax return at the end every tax year, you will receive a P60 stating your earnings total and taxes paid
  • P45 – If you quit your job
  • P11d is for those who have a benefit from their employer such as a health scheme

The majority of forms for PAYE are provided from your company.

Do it yourself

If you contact the tax office on your own, you will not be charged, but must know what you’re trying to claim, and ensure whether you’ve been rewarded with all the PAYE tax refunds you are entitled to. Making an PAYE tax return claim could be time-consuming and difficult. Make use of the Tax Rebate calculator below to obtain an estimate of your personal situation regarding the amount of tax relief you might be owed in Overpayments of PAYE as well as work expenses.

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