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HMRC internal manual

Compliance Operational Guidance

Supporting Guidance: employer compliance: guidance by subject: Employment Status & Intermediaries (ES&I): PAYE settlement agreements (PSA)

A PSA is an agreement between an employer and HMRC where the employer meets the employees’ tax liability on items - usually expenses and benefits that are:

  • minor
  • irregular or
  • it is impractical to apply PAYE or
  • it is impractical to apportion the value of a shared benefit across a number of employees.

Guidance on what can and cannot be included in a PSA is contained in the PSA Manual at PSA1050

Where a PSA is agreed the employer must pay the tax and Class 1B NICs to HMRC by 19 October following the end of the tax year to which the PSA relates.

The ES&I/LB tax specialist will:

  • identify whether the PSA relates to a dedicated expatriate scheme or includes inward expatriate employees within the application for a mixed scheme

    • pass applications for dedicated expatriate schemes to PT International in accordance with the protocol available on the local Compliance site or consult PY International where inward expatriate employees are included within the application for a mixed scheme.
  • deal with all (excluding those for dedicated expatriate schemes) unprompted PSA applications from employers
  • deal with referrals from compliance officers (ECR308) following an intervention
  • deal with inaccuracies arising from PSAs including issuing Regulation 110 Determinations where necessary.
  • provide advice to caseworkers and employers on PSAs.


Where a compliance check identifies that a PSA is not in place but the caseworker

  • considers that one would be beneficial and
  • has encouraged the employer to apply for a PSA

ES&I should follow up the application with the employer.

Guidance on PSAs is in the PSA Manual.