How income tax is taken through PAYE
PAYE takes income tax from every payday. Work out taxable pay, tax at two rates, and see why PAYE looks at the whole year so far.
This path is practice in how the records and the sums work. It is not tax advice. Any rate or allowance in a question is an example for that question, so check GOV.UK for the current figures.
Task 1Taxable pay3 questions
PAYE stands for Pay As You Earn. The employer takes income tax from each payday and pays it over to HMRC.
The employee's tax code gives an amount of tax-free pay. Gross pay less tax-free pay is taxable pay, and the tax is a percentage of taxable pay.
Sam is a mechanic at Kestrel Row Cycles on £2,400 a month. The rates in this module are made up for practice, because the real ones change every tax year.
Task 2Two rates of tax4 questions
Task 3The year so far3 questions