PAYE in the UK (2026–2027)

PAYE (Pay As You Earn) is the UK tax system where employers deduct taxes directly from employees’ salaries and pay them to HMRC. Through PAYE, Income Tax and National Insurance are automatically collected from wages through payroll.

Key figures for the 2026–2027 tax year (6 April 2026 – 5 April 2027):

• Personal Allowance: £12,570 per year (tax-free income)
• Income Tax rates:
  £12,571 – £50,270 → 20%
  £50,271 – £125,140 → 40%
  Over £125,140 → 45%

Employers operate PAYE through payroll software which calculates the tax and National Insurance deductions for each employee.

If you need help with PAYE, payroll setup or UK tax compliance, we will be happy to assist you and support your business with professional accounting services.