Pay As You Earn (PAYE) is the name given to the income tax system for employees in Ireland and was introduced on 6 October, 1960.The evolution of PAYE over the past 50 years is also the history of Irish payroll systems from paper to computers.

Devised by Sir Paul Chambers, PAYE was introduced into the UK in 1944 following trials in 1940 and 1941. The financial strain that the Second World War placed upon the UK meant that it needed to collect more tax from more people.

PAYE in Ireland applies to earnings of all kinds arising from employment, including bonuses, overtime
and non-cash payments known as Notional Pay or Benefit-In-Kind (BIK).

PAYE operates by facilitating an employer to pay the tax due on your income to Revenue as you earn it. So, when you receive your pay at the end of a pay period, the tax deducted from it is due to be paid by your employer by the 14th of the month following the end of the calendar month in which the pay period occurred.
The reason why the tax year from 1960 through to 2001 commenced on the 6th April is a hangover from the 16th century when Pope Gregory decided that both the legal and Church year should finish on the 5th April.
The UK is the only country still operating this system once Ireland moved to a calendar year basis in 2002.
The amount of PAYE was based on a Certificate of Tax Allowances provided by Revenue to employers from Oct 1960 to April 2001. From April 2001 the amount of PAYE was based on a new system of Tax Credits instead of Tax Allowances.

The 2001 tax year was a short year of 38 weeks to finish on 31st December, 2001. This was to facilitate the introduction of the tax year on a calendar basis starting on 1st January, 2002. Also the 1st January, 2002 saw the introduction of the euro in place of the Irish punt.

In the early days of PAYE and payroll, calculations were done manually on paper 3 in 1 systems and on Tax Deduction cards provided by Revenue. During the 60s as the cost of computers and calculation machines became affordable larger companies started to use comptometers (which were manual action) to perform each arithmetic operation, then to paper tape and punched card accounting machines and then to stored-program computers.

Since the early 80s with the introduction of the Personal Computer (PC) almost every company in Ireland now run or have their payrolls run their payrolls on PCs. With the take-off of the internet in the 90s a lot of payroll activities now take place on the web. The filing of P35s with the Revenue Online System (ROS) and the take-off of cloud computing will continue the evolution of Irish payroll.