Pay as you earn

Pay As You Earn (PAYE) is the method used to deduct income tax contributions from your pay. These contributions are spread across the financial year (April to April) and show up as deductions on your weekly or monthly pay slips.

The amount of tax you pay depends on your salary and everyone is entitled to an initial tax-free sum. For 2008/2009, the tax-free allowance for a single person under 65 is £6,035.

Income tax bands

Full details of tax bands for financial year 2008/2009 are as follows:

Basic rate: 20%     Salary range: £0 - £34,800

Higher rate: 40%   Salary range: over £34,800

Tax free allowances

Personal tax free allowances for financial year 2008/2009 are as follows:

Single person: £6,035

Single person aged 65-74: £9,030

Single person 75 and over: £9,180

Married couples’ allowance: £6,535

Married couple 75 and over: £6,625

Further links:

- Negotiating pay

- IR35 explained

- Pensions advice

- Find an IT job

Disclaimer: the information on these pages is provided for your information and reference only. Before making any important decisions regarding your employment or any legal matter, you should consult a qualified professional adviser who can provide specific advice based on your individual position.