PAYE (Pay As You Earn)
The British payroll tax system: your employer directly withholds tax and National Insurance from your salary. Comparable to the Dutch payroll tax system.
Nederlands
PAYE (Pay As You Earn)
Het Britse systeem van loonbelasting: je werkgever houdt direct belasting en National Insurance in op je salaris. Vergelijkbaar met het Nederlandse systeem van loonheffing.
If you're a Dutch national moving to the United Kingdom for work, you'll quickly encounter the PAYE (Pay As You Earn) system. This is the UK's standard way for employers to withhold tax and National Insurance directly from your salary. While it shares similarities with the Dutch payroll tax system, there are important differences to be aware of.
What exactly is the PAYE (Pay As You Earn) system?
PAYE is the UK’s standard payroll tax system, where your employer calculates and withholds income tax and National Insurance from your pay before you receive it. For most employees, this means you don’t have to make separate tax payments or file a yearly tax return unless you have additional income or are self-employed.
PAYE is similar to the Dutch system of payroll tax, but the rates, rules, and how social contributions work are different. Every payslip shows exactly how much tax and National Insurance have been deducted.
How does PAYE work when you start working in the UK?
When you start a new job, you’ll need to provide your employer with your details, including your National Insurance number (similar to the Dutch BSN). Your employer then registers you with HM Revenue & Customs (HMRC), the UK’s tax authority, to bring you under the PAYE system. From your very first paycheck, tax and National Insurance are deducted automatically.
If you don’t yet have a National Insurance number, you’ll need to apply for one. Check the current rules with HMRC.
Do expats need to arrange anything themselves for PAYE?
Most of the process is handled by your employer, but you must make sure to provide accurate details. This includes:
- Your full name and address
- Your National Insurance number
- A P45 form from a previous UK employer (if you have one)
Regularly review your payslip to ensure the correct deductions are being made. If you spot an error, contact your employer or HMRC.
How does PAYE differ from the Dutch payroll tax system?
While both systems withhold tax at source, there are differences:
| Feature | Netherlands (Loonheffing) | UK (PAYE) |
|---|---|---|
| Social contributions | Volksverzekeringen | National Insurance |
| Tax authority | Belastingdienst | HM Revenue & Customs |
| Annual summary | Jaaropgave | P60/P45 |
| Personal tax return requirement | Sometimes | Sometimes |
Note: National Insurance in the UK is structured differently from Dutch social premiums, with distinct contribution classes and thresholds.
What if you have multiple jobs or extra income?
If you earn money in addition to your main job—such as freelance work or a second job—you may need to do a 'Self Assessment' tax return in the UK. Check the current rules with HMRC to see if this applies to your situation.
What should you do when leaving the UK?
When you leave the UK, you must inform HMRC. Your employer will give you a P45 form, which you’ll need for your records or to claim any tax refund. Check the current rules with HMRC about reclaiming any overpaid tax before you leave.
Where can you find more information?
For up-to-date and personal information, consult HMRC, the official UK tax authority. Their website provides guidance in English and sometimes other languages. Your employer can also explain your payslip and the PAYE system. For complex cases like cross-border work or double taxation, seek professional advice.
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finance