The PAYE regime provides for income tax to be deducted from 'relevant payments' of PAYE income (see E4.1103, E1.1108): that is to say, of PAYE employment income, PAYE pension income, and PAYE social security income (collectively called PAYE income)1. Its object is to ensure, as far as possible, that the deductions of tax in any year discharge the correct amount of tax due from the recipient in respect of those payments. This objective is attained in the majority of cases, particularly where the recipient has no other substantial source of taxable income. However, the PAYE system can be an imprecise instrument in more complex situations, especially where the taxpayer has several different sources of income.
PAYE deduction of tax
The basic rule is that an employer (see E4.1103) is required to deduct tax on making a relevant payment and to account to HMRC for the tax so deducted.
The tax liability of an employee depends on the amount of their income and the amount of any applicable allowances and reliefs. The amount of those allowances and reliefs
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