Under PAYE you never write a cheque for the tax on your wages. Your employer works out the deduction each payday from your tax code, takes it off before you are paid, and sends it to the tax authority. The name is used in the UK, Ireland and New Zealand for the same idea the United States calls withholding.
In the UK, employers deduct both income tax and National Insurance through payroll, and those who run it themselves must report each employee's pay and deductions to HMRC on or before every payday, according to GOV.UK. Student loan repayments and pension contributions can travel through the same system. Because the code carries your allowance and the calculation runs year to date, steady pay from one job should have had the year's tax taken by the last payday.
Ireland uses PAYE for employment income and pensions. It also gives anyone taxed under PAYE an Employee Tax Credit worth up to €2,000 in 2026, capped at 20% of PAYE income for low earners, as Revenue sets out. The self-employed do not get it, which is one reason the same income can be taxed differently from a salary.
In New Zealand an employee who gives no tax code is taxed at 45% plus the ACC earners' levy, according to Inland Revenue.
The take-home pay calculator works out the year's tax and spreads it evenly across pay periods, which is what PAYE ends up doing for steady pay. A bonus month or a mid-year change of job will make a single payslip differ from that average.