What does PAYE stand for?

Pay as you earn

PAYE is short for a common practice in the world of income taxes. It stands for an approach where a certain percentage of earnings are deducted before the worker gets paid.

For example, if John earns $1000 per month, and the PAYE rate is 20%, John will receive $800, while the remaining $200 will be automatically deducted as tax.

This method ensures that the tax is collected consistently and the worker does not have to worry about setting aside money for taxes because it’s already been taken care of.

Example for using ‘PAYE’ in a conversation

Hey, did you get your paycheck yet? πŸ’Έ

Yeah, I just checked my bank account. But why does it seem a little less than usual? πŸ€”

Oh, that might be because of PAYE. It’s a tax deducted from your salary before you receive it. 🧾

Ah, got it! So, it’s like paying taxes as you earn, right? πŸ€·β€β™€οΈ