A PAYE Settlement Agreement (PSA) allows employers to make one annual payment to cover the tax and National Insurance on minor, irregular or impracticable expenses or benefits for their employees on a grossed up basis.
If employers get a PSA for these allowable items they will not be required to:
- process these items through their payroll to work out tax and National Insurance
- include them in their end-of-year P11D forms
- pay Class 1A National Insurance on them at the end of the tax year (the employer will pay Class 1B National Insurance as part of their PSA instead)
From 2018-19 HMRC has moved to a new, simplified Enduring PSA Process. The new process replaces the previous process where employers had to apply annually for a PSA and ensure signed agreements were in place by a specified date. Under the new process, once an employer has signed an Enduring PSA Agreement there is no need for them to do anything else unless the PSA Agreement needs to be amended or HMRC or the customer decides that a PSA is no longer required.
For those customers/clients who have already applied for a PSA and have received the P626 contract, HMRC must receive the signed form by post by 6 July to ensure that any expenses and benefits listed in the contract are covered by the PSA. Please post the form to:
HM Revenue and Customs (HMRC), Business, Tax and Customs, PSA Team, Benton Park View, Newcastle upon Tyne, NE98 1ZZ.
If you wish to speak to the PSA team our telephone number is 0300 322 7077