PAYE NIC tax debt

The Pay As You Earn (PAYE) system is a method of paying income tax and national insurance contributions. Your employer deducts tax and national insurance contributions from your wages or occupational pension before paying you your wages or pension.

Wages includes sick pay, maternity or paternity pay and adoption pay. You pay tax over the whole year, each time you are paid, rather than paying tax in one lump sum. Your employer is responsible for sending the tax on to HM Revenue and Customs (HMRC). Each pay day you will get a pay slip setting out your pay, tax and national insurance contributions and any other deductions from your pay. If you get a pension, you may not get a payslip for every payment.

At the end of the tax year, you will get a form P60 which sets out the total amounts paid to you and deducted from you for the previous tax year.

If you pay tax on your wages or occupational pension under PAYE, the PAYE system can also be used to collect the income tax on any other taxable income you have. For example, if you pay tax under PAYE on an occupational pension, the tax due on your State Retirement Pension is collected through PAYE by deducting tax from your occupational pension. The PAYE system can also be used to collect tax due on other sources of income such as untaxed interest or rent.

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