1. What Is PAYE?

PAYE (Pay As You Earn) is the UK system for collecting Income Tax and National Insurance from employment. It's deducted directly from your salary or pension before you receive it.

2. How Does The Calculator Work?

The calculator uses the PAYE equation:

Where:

• \( Taxable\ Income \) — Income subject to tax after allowances (pounds)
• \( Marginal\ Rate \) — Tax rate applicable to your income band (20-45%)

Explanation: The calculation determines the amount of tax payable based on your taxable income and the applicable marginal tax rate in the UK tax system.

3. Importance Of PAYE Calculation

Details: Accurate PAYE calculation ensures correct tax deductions, helps with financial planning, prevents underpayment or overpayment of taxes, and ensures compliance with HMRC regulations.

4. Using The Calculator

Tips: Enter taxable income in pounds (after personal allowance and other deductions), and select the appropriate marginal tax rate based on your income band. All values must be valid (income > 0, rate between 20-45%).

5. Frequently Asked Questions (FAQ)

Q1: What Are The Current UK Tax Bands?
A: For 2024/25: Basic rate 20% (£12,571-£50,270), Higher rate 40% (£50,271-£125,140), Additional rate 45% (over £125,140).

Q2: What Is The Personal Allowance?
A: The personal allowance is £12,570 for 2024/25 - this is the amount you can earn tax-free before PAYE applies.

Q3: How Often Is PAYE Deducted?
A: PAYE is typically deducted monthly or weekly, depending on your pay frequency, by your employer.

Q4: What If I Have Multiple Jobs?
A: Each job has its own tax code and PAYE calculation. Your personal allowance is usually applied to your main job.

Q5: Can I Claim Tax Back Through PAYE?
A: Yes, if you've overpaid tax, you can claim a refund through HMRC, which may be processed via your PAYE code.