Proposed changes to PAYE settlement agreement (“PSA”)


Written by: Mark Abbs

Blick Rothenberg has issued a response to the new HMRC consultation on simplifying the PSA process. PSAs are an annual agreement between HMRC and the employer, whereby the employer settles the tax and NIC, on a grossed up basis, on tax expenses and benefits which are minor, irregular or it would be difficult to apportion the cost to employees.

A PSA detailing the items to be covered is agreed with HMRC on an annual basis by 6 July following the end of the tax year. The calculation of the tax and NIC due has to be agreed and paid to HMRC by 19 October (22 October if paying electronically) following the end of the tax year.

Under the new proposals HMRC is:
  • Removing the requirement to agree PSAs in advance
  • Replacing the paper return with a digital return of the calculation of tax and NIC
  • Aligning the dates for the submission of PSA and payment of tax and NIC with the P11D/P11D(b) deadlines of 6 July and
  • 19 July respectively.
  • Removing the minor criteria as it is felt that most items that fall within this category are now covered by the exemption relating to trivial benefits
  • Providing greater clarity regarding the scope of ‘irregular’ and ‘impracticable benefits’