PAYE (Pay As You Earn) is the running pre-payment of personal income tax. Each month your employer calculates your tax based on annualised earnings, deducts it from your gross pay, and remits it to SARS by the 7th of the following month using an EMP201 declaration.
At the end of the tax year (28/29 February), your total PAYE for the year is reconciled against the tax actually owed on your annual income, deductions, and rebates. If too much was withheld you get a refund; if too little, you pay in. The reconciliation happens via your annual ITR12 income tax return.
PAYE applies to most salaried employees earning above the tax threshold (R99,000 for under-65s). Independent contractors and freelancers usually don’t have PAYE deducted — they pay provisional tax twice a year instead.