The following Tax guidance note Produced in partnership with Vaneeta Khurana of EY LLP provides comprehensive and up to date legal information covering:
A PAYE settlement agreement (PSA) is a voluntary arrangement which allows an employer to settle, in a single annual payment, the income tax and National Insurance contributions (NICs) liability of their employees on certain minor and irregular expenses and benefits.
A PSA does not remove an employer’s requirements to operate PAYE on general earnings and appropriately report expenses and benefits.
HMRC will agree to a PSA where amounts or benefits are made available to employees and the amounts or benefits are:
impracticable to tax through the payroll, expenses or benefits systems
There is no definition of what qualifies as minor in monetary terms. HMRC provides a list for illustrative purposes:
reimbursement of late night taxi fares where the conditions for tax exemption are not satisfied
personal incidental expenses in excess of the daily tax-free limit
a present for an employee in hospital
staff entertainment, for example a ticket to a sporting event
use of a pool car where the conditions for tax exemption are not satisfied
subscriptions to gyms, sports clubs etc
telephone bills, or
gift vouchers and small gifts
There is no legislative definition of irregular. It will be relevant to consider the nature of the item being provided, how often it is provided to a single employee,
**excludes LexisPSL Practice Compliance, Practice Management and Risk and Compliance. To discuss trialling these LexisPSL services please email customer service via our online form. Free trials are only available to individuals based in the UK. We may terminate this trial at any time or decide not to give a trial, for any reason. Trial includes one question to LexisAsk during the length of the trial.
To view the latest version of this document and thousands of others like it, sign-in to LexisPSL or register for a free trial.
Existing user? Sign-in
Take a free trial
Take a free trial
0330 161 1234