What appears on your payslip because of PAYE
Open any UK payslip and the PAYE numbers are usually grouped together near the top of the deductions block:
- Income Tax — the largest PAYE deduction for most employees. Calculated using the employee's tax code and the cumulative pay since the start of the tax year (6 April).
- National Insurance — see /glossary/national-insurance. Calculated per pay period (not cumulatively), based on the employee's NI category.
- Student loan repayments (if applicable) — collected through PAYE on the same payslip, sent to HMRC alongside the tax.
These figures are reported to HMRC via an FPS submission on or before the payday they appear on.
How PAYE works (in plain English)
Three things happen behind every PAYE deduction:
- HMRC tells your employer how much of your pay is tax-free via your tax code. The standard code for 2026/27 is
1257L, which means the first £12,570 of annual income is tax-free. - Your employer calculates the tax on the rest at the prevailing Income Tax rates and deducts National Insurance separately.
- The employer hands the money over to HMRC by the 22nd of the following month (electronic payments) and reports the breakdown via an FPS submission at the same time.
Because the calculation runs every payday, PAYE smooths your tax bill across the year — by the end of March you've usually paid roughly the right amount and don't need to file a tax return.
Income Tax rates collected through PAYE (2026/27, rest of UK)
Scotland sets its own Income Tax rates and bands; the rest of the UK uses these. National Insurance is separate — see the National Insurance page.
| Band | Range | Rate |
|---|---|---|
| Personal allowance | £0 – £12,570 | 0% — tax-free |
| Basic rate | £12,571 – £50,270 | 20% |
| Higher rate | £50,271 – £125,140 | 40% |
| Additional rate | Over £125,140 | 45% |
The personal allowance reduces by £1 for every £2 of income above £100,000 and is frozen at £12,570 until April 2028.
Common confusion
PAYE is the system, not the tax. People sometimes say "PAYE tax" when they mean Income Tax. PAYE is just the plumbing — Income Tax and National Insurance are the actual deductions PAYE collects.
Cumulative vs. non-cumulative. Standard tax codes (1257L) are cumulative — every payday the calculation looks at year-to-date pay and tax. Codes ending in W1 / M1 (or X) are non-cumulative — each pay period is treated in isolation. That's usually a sign of an emergency tax code HMRC hasn't yet replaced.
Underpaid or overpaid? PAYE aims to land you at the right total by 5 April. If life events (job change, second job, benefits) push it off, HMRC sends an updated tax code via a P2 "coding notice" and the employer adjusts from the next payday.
Related terms
Authoritative source