A PAYE Settlement Agreement (PSA) allows you to make one annual payment to cover all the tax and National Insurance due on small or irregular taxable expenses or benefits for your employees. If you get a PSA for these items, you will not need to:
- Put them through your payroll to work out tax and National Insurance
- Include them in your end of year P11D forms
- Pay Class 1A National Insurance on them at the end of the tax year (you pay Class 1B National Insurance as part of your PSA instead)
Some employee expenses are covered by exemptions (which have replaced dispensations). This means you won’t have to include them in your end-of-year reports.
The expenses or benefits you include in a PSA must be one of the following:
- Minor, for example a small birthday present
- Irregular or impactable (difficult to work out the value of or divide between individual employees) for example shared cars or taxi journeys.
Please note that you cannot include high-value benefits like company cars, cash payments such as bonuses or beneficial loans in a PSA.
Do let us know if this is of interest and we can discuss it with you in further detail.