Why is my tax code wrong?

Tax codes can be wrong due to incorrect information, benefits in kind, or HMRC estimates. Contact them to correct.

What is a Full Payment Submission (FPS)?

The electronic report employers send to HMRC on or before each payday with pay and deductions.

Can I check my PAYE record?

Yes, through your Personal Tax Account on GOV.UK. It shows income, tax paid, and tax code.

What if I have two jobs?

You'll have different tax codes for each - usually one with your allowance, others BR (basic rate).

What is an emergency tax code?

Applied when HMRC doesn't have your details - often results in overpaying tax initially.

Income Tax2026/27

What is PAYE? UK Definition 2026/27

Written by Waqas Sagar ACA, FCCA, FMAAT

•

Verified by ICAEW, ACCA & AAT

•Updated April 2026

Quick Answer

Pay As You Earn - the system for deducting income tax and NI from wages.

Definition of PAYE

Pay As You Earn (PAYE) is HMRC's system for collecting income tax and National Insurance directly from employees' wages. Employers deduct tax based on tax codes and pay it to HMRC. This means employees receive net pay and usually don't need to file Self Assessment unless they have other income.

PAYE — Key Facts for 2026/27

Filing frequency	On or before each payday
RTI submission	Full Payment Submission
Payment deadline	22nd of following month
Tax codes	Issued by HMRC

How PAYE Works — Example

PAYE calculation

1Gross monthly pay: £4,000
2Tax code: 1257L (£1,047.50 monthly free)
3Taxable: £2,952.50
4Tax: £590.50
5NI: £219.44
6Net pay: £3,190.06

How PAYE Affects Your Tax

PAYE simplifies tax for employees - most have correct tax deducted automatically. However, wrong tax codes can cause over or underpayments. Check your payslip and code regularly.

Official HMRC Guidance on PAYE

For official guidance, refer to HMRC's documentation. Tax rules can change, so always verify current rates and thresholds on gov.uk.

HMRC: PAYE for employers

Frequently Asked Questions about PAYE

Related Tax Terms

Tax Code

A code telling your employer how much tax-free pay you get.

National Insurance

Contributions paid by employees and employers that fund state benefits.

Accuracy Note

This information is for guidance only and is based on 2026/27 tax year rates. Tax rules are complex and your circumstances may differ. For personal advice, consult a qualified accountant or tax adviser.