A PAYE Settlement Agreement (PSA) is a voluntary arrangement between an employer and HMRC, enabling the employer to make a single annual payment to cover tax and National Insurance Contributions (NICs) on minor, irregular, or impractical employee benefits and expenses.
A PSA is useful if you want to provide your employees with benefits (for example an annual party that exceeds the exempt limits) without them bearing an additional tax and national insurance burden. By setting up a PSA with HMRC, employers can streamline the process of settling tax and NICs on specific employee expenses and benefits with one yearly payment. Whilst this arrangement eases the administrative load by eliminating the need to report these benefits individually through payroll or P11D forms, a PSA can be disproportionately expensive for employers.
If you have a PAYE Settlement Agreement for the 2023 to 2024 tax year, any tax and National Insurance contributions must be paid by 22 October 2024 if paying electronically, or by 19 October 2024 if paying by post. You must submit your calculations before making the payment.
If you pay your PSA without submitting calculations it means that the payment cannot be verified in terms of what it is for or if it is correct.
Calculations can be submitted online using this link.
If you have any questions or need assistance with getting a PSA or submitting PSA calculations, please don’t hesitate to reach out to a member of the CB Reid team for help.