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E4.1146 The PAYE cumulative basis—overview

PAYE is operated on a cumulative basis where a code has a letter suffix or a K prefix, unless an HMRC officer has directed that Week 1 or Month 1 tables should be used (see E4.1151)¹. The cumulative nature of PAYE aims to ensure that approximately the correct amount of tax is collected during the year as changes in circumstances reflected in a new code or changes in salary level are dealt with automatically through the PAYE regime (resulting in additional tax being collected or tax being repaid where necessary).

On making a payment of relevant income to an employee, an employer must ascertain or calculate and record on the employee's deductions working sheet (or equivalent computerised record) the following particulars²:

1. Ìý

   (1)ÌýÌýÌýÌý the date and amount of the payment (see E4.1142)

2. Ìý

   (2)ÌýÌýÌýÌý the cumulative total of the relevant payments in the tax year up to and including the date of the payment

3. Ìý

   (3)ÌýÌýÌýÌý the cumulative free pay or additional pay at the date