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What Is PAYE?
Pay As You Earn (PAYE) is how HMRC collects Income Tax and National Insurance directly from your salary each pay period, before you receive it. Your employer calculates and deducts both based on your tax code.
Common Tax Codes 2026/27
| Tax Code | Meaning |
|---|---|
| 1257L | Standard code — full £12,570 Personal Allowance |
| BR | All income taxed at basic rate (20%), no allowance — usually a second job |
| D0 | All income taxed at higher rate (40%) |
| NT | No tax deducted |
| K-prefix | Negative allowance — extra income being taxed (e.g. company benefits) |
Running Payroll for Your Business?
This calculator is built for individuals checking their own numbers. If you're running payroll for a team, a dedicated platform automates this calculation for every employee, every pay run.
- Small business, first hire: set up PAYE and auto-enrolment correctly from day one.
- Growing team: automate payslips, RTI submissions and pension contributions.
- Multiple pay rates or contractors: handle mixed PAYE/self-employed workforces in one place.
- Switching from spreadsheets: reduce manual errors on tax code changes and NI category switches.
Cloud payroll platforms like Xero, QuickBooks and BrightPay handle Income Tax, NI, student loan and pension deductions automatically.
Compare Payroll Software →Transparency & Methodology
Methodology & Sources
Figures are public HMRC/gov.scot/DWP rates. For your exact position, use gov.uk/estimate-income-tax.
Not Tax or Legal Advice
Information only. Consult the Chartered Institute of Taxation or an adviser via the FCA Register.
Open Source
Formulas are public. Inspect on GitHub.