6 April 1944 PAYE tax collection introduced in Great Britain

The growing number of taxpayers during the Second World War war led to the need for a more efficient tax collection system, and Pay As You Earn – PAYE – was introduced in 1944 as a result.

In place of annual or twice-yearly collections, tax was deducted by employers from wages weekly or monthly and an employee leaving work was given a P45 recording his or her code number, pay to date and tax paid to date to pass on to a new employer.

The British scheme had been piloted by Churchill’s Chancellor Sir Kingsley Wood from 1940-41. On the day it was to be announced, Wood collapsed and died. But by the end of January 1944, fifteen million people – anyone earning £100 a year or more – had received notices telling them their code number. In the Inland Revenue’s first exercise in public relations, staff visited work places to discuss the system with employers and employees.