PAYE is how most UK workers pay tax: your employer calculates income tax and National Insurance on each payslip, deducts it and sends it to HMRC before your money reaches your bank account. Your tax code drives the calculation, and the system spreads your Personal Allowance evenly across the year.
PAYE usually gets things right for one steady job, but it lags reality when your circumstances change mid-year: new job, variable bonuses, taxable benefits or a second income. That is when overpayments and underpayments build up. The Salary Calculator shows what your deductions should be, so you can spot a payslip that does not match.
On £2,500 a month, PAYE gives you £1,047.50 of tax-free pay (the annual allowance divided by 12), taxes the remaining £1,452.50 at 20% (£290.50) and takes 8% National Insurance on the same slice (£116.20), leaving take-home pay of £2,093.30 before pension or student loan deductions.
