Meaning ‘Pay As You Earn’, this term refers to the method of paying Income Tax and National Insurance Contributions (“NICs”) in the UK.
Your employer will deduct and pay your taxes to HMRC ‘as you earn’, i.e. with each payment your employer makes to you.
Where we refer to PAYE in the recruitment sector, often it refers to working as an employee of the agency, where the agency pays you directly for the work you undertake.
If engaged by a compliant umbrella company, the payments you receive will also be paid under PAYE, however, the assignment rate paid to the umbrella company by the agency should be increased in order for the umbrella to account for the employment costs it incurs, which the agency would pay directly if it employed you.
