The process for the calculation of PAYE income tax is specified in s 3 of the Income Tax (Withholding Tax) Regulations 2000. When calculating PAYE income tax, it is permissible to reduce the assessable earnings by the value of the LST (see 2.3) which the employer must deduct from the employee's gross salary.
Once assessable pay has been ascertained, income tax is calculated for monthly paid employees as follows:
(A – B) / C
A = The amount of tax payable in accordance with the annualised employment income calculated in accordance with the formula set out below
B = The total tax previously withheld for the previous months in the assessable year of charge
C = The number of months remaining in the income year, including the current month
The formula
To continue reading
View the latest version of this document, as well as thousands of others like it, sign in to Tolley+™ Research or register for a free trial
Web page updated on 17 Mar 2025 15:45