PAYE (Pay As You Earn) is the system that HM Revenue & Customs (HMRC) uses to collect Income Tax and National Insurance contributions (NICs) from employees’ pay as they earn it. The term ’employee’ in this guide includes directors of limited companies.
As an employer, you’ll have to deduct tax and NICs from your employees’ pay each pay period and pay Employer’s Class 1 NICs if they earn above a certain threshold. You pay these amounts to us monthly or quarterly. If you don’t send the correct amount, or if you send it in late, you may have to pay interest.