Explanation of "Pay As You Earn"
Definition: "Pay As You Earn" (often abbreviated as PAYE) is a system used in the United Kingdom where employers take money from an employee's wages to pay tax directly to the government. This means that when you earn money, some of it is automatically taken out to cover your taxes, so you don’t have to pay a large amount all at once at the end of the year.
Usage Instructions
Example
Advanced Usage
In a more complex sentence, you might use it like this: "The Pay As You Earn system simplifies tax payments for employees, ensuring they contribute to government revenue regularly rather than facing a large bill at the end of the fiscal year."
Word Variants
Different Meanings
In this context, "Pay As You Earn" specifically refers to the tax system in the UK. However, the concept of “pay as you earn” can also apply to other financial systems where payments are made based on earnings (like certain loan repayments), but the primary meaning relates to tax.
Synonyms
Withholding Tax: This term can sometimes be used interchangeably, though it may refer to a broader range of tax deductions.
Payroll Tax: While it usually refers to taxes taken out of an employee's paycheck, it can sometimes overlap with PAYE in discussions about tax withholdings.
Idioms and Phrasal Verbs
There are no direct idioms or phrasal verbs specifically related to "Pay As You Earn," but you might hear phrases like "deduct at source," which means to take money (like taxes) directly from the income before it's given to the employee.
Summary
"Pay As You Earn" is a tax system where your employer automatically takes out tax from your salary. This makes it easier for you as you don’t need to worry about paying a large amount at once.