Non-approved schemes: payer’s responsibilities: operation of PAYE
The PAYE Regulations do not apply to payments chargeable under Section 386 ITEPA 2003 (see EIM15412).
Where a payer makes a lump sum payment that is chargeable under Section 394 ITEPA 2003 there is an obligation to deduct and account for tax under the PAYE Regulations on the chargeable payment.
PAYE does not apply to the provision of non-cash benefits under a non-approved or employer-financed scheme.
If an employer indicates that an application was made to Audit & Pension Scheme Services (APSS) for approval of a payment from a non-approved scheme under Statement of Practice 13\91 (see EIM15428 and following guidance), PAYE should still have been operated unless the scheme was approved and the lump sum was paid after the operative approval date or the lump sum was approved as a small payment under EIM15429.