PAYE - What is PAYE?

PAYE (Pay-As-You-Earn) is a tax paid on employee income

Debitoor is a comprehensive accounting system catering to small business and freelancers alike. Try Debitoor for free with a 7-day trial period.

PAYE is a type of withholding tax, meaning that it is taken directly from the employee’s income and paid to the government. In the UK, Ireland, New Zealand and South Africa, most employees are subject to the PAYE tax on their income (PAYG in Australia).

It is the responsibility of the employer to ensure that this tax is applied as a withholding tax on the monthly income of all employees who are not exempt.

Exemptions from PAYE

If you are self-employed or an independent contractor and are not registered as an employer, you may be exempt from this tax. To determine your status in the UK, HMRC provides a useful tool to determine your employment status and whether you’re exempt from PAYE.

Reporting to your tax authority

Once you have registered as an employer and have taken on your first employee(s), it’s important to stay on top of your payroll. This involves managing and reporting the status of your employees and their income.

There is a variety of free payroll software available to small businesses, which simplifies running a payroll yourself. PAYE is an important part of tax accounting if you have employees who fall under this requirement.

Debitoor and tax

Debitoor aims to simplify and streamline your business accounting, allowing efficient management of income and expenses, including sending VAT reports and freeing up time to run other aspects of your business.

Our integration with online time tracking apps allow you to accurately record work time to ensure proper remuneration for yourself and/or employees.