PAYE Tax Contributions Hit 20-Year High as Employment Rate Climbs

New research from The Global Payroll Association (GPA), the international trade organisation for payroll professionals, highlights the vital role that payroll software plays within the UK economy, with PAYE tax contributions increasing 11.4% annually, also hitting their highest in the last two decades. 

The Global Payroll Association analysed HMRC pay-as-you-earn (PAYE) tax receipt data* from the past years (2004–2024) to reveal how the amount of money being generated by UK employees in the past 12 months compares to the amount of income tax generated over the past two decades. 

New HMRC figures show that UK workers contributed a total of £235.4 billion in PAYE income tax in 2023/24. 

This total represents an annual increase of 11.4% compared to the 2022–23 total of £211.3 billion. 

This marks the third consecutive year of PAYE growth and the highest rate of PAYE contributions in the last 20 years. It also means that since 2004, total annual contributions have grown by 117%. 

Furthermore, the latest figures show that PAYE accounts for 86% of all income tax contributions and 28.4% of all tax receipts. 

One key reason for PAYE contributions hitting an all-time high is the UK’s employment rate. 

Since 2021, the number of over-16s in employment has increased by 2.1%, while the employment rate between ages 16 and 64 has increased by 0.5%. 

Furthermore, employment opportunities are also on the rise, with the number of UK job vacancies rising by 14.3% since 2021. 

Melanie Pizzey, CEO and founder of the Global Payroll Association, says:  “With more and more money passing through the PAYE system, it’s never been more important for companies to get their payroll right and ensure that their employees are being paid the correct amount and at the correct time, while also making the appropriate tax contributions.

“Time and time again, we hear about businesses not giving proper consideration to just how important payroll is and all too often, price is the primary concern rather than functionality and fit.”