Part 11: Pay As You Earn
Overview
2703.Part 11 provides for the Pay As You Earn system (generally known as “PAYE”). Under PAYE tax is deducted at source from payments made by employers and others. PAYE is the primary means of collecting income tax on PAYE income (broadly employment income, most pension income and social security income). The details are left for regulations made by the Board of Inland Revenue. This Part of the Act:
provides the powers to make PAYE regulations and issue tax tables;
extends PAYE to some persons and payments not otherwise covered; and
allows alternatives to PAYE in some circumstances.
2704.Chapter 1 introduces the Part and gives the meaning of “PAYE income”.
2705.Chapter 2 requires the Board of Inland Revenue to make regulations for the assessment and collection of income tax on PAYE income. These “PAYE regulations” may (among other things) require employers and others to deduct tax from payments of PAYE income.
2706.Chapter 3 is the first of two Chapters dealing with special provisions. It covers sections which deal with special types of payer or payee.
2707.Chapter 4 is the second Chapter dealing with special provisions. It deals with PAYE on the provision to employees of vouchers or of assets readily convertible into money, and the proceeds arising from share schemes.
2708.Chapter 5 allows the PAYE regulations to provide for “PAYE settlement agreements” (PSAs) between employers and the Inland Revenue. Under these, employers can agree to meet the income tax liabilities of their employees on some expenses and benefits in kind. The agreement replaces the normal processes of PAYE and assessment.
2709.Chapter 6 contains miscellaneous and supplemental material.
