This part of GOV.UK is being rebuilt – find out what beta means

HMRC internal manual

PAYE Settlement Agreements

Overview of PAYE Settlement Agreements: What can and cannot be included in a PSA

A PSA does not replace the requirement that employers must operate PAYE on general earnings and return details of expenses and benefits in kind on forms P11D and P11D(b).

General earnings that may be considered for inclusion in PSA consist of

  • taxable benefits provided or made available by reason of employment with the employer
  • expenses paid to those employees

Such items can be included if they satisfy one or other of the following terms

  • minor, or
  • payable on an irregular basis or
  • given in circumstances where it is impractical to apply PAYE or apportion the value of particular benefits which have been shared by a number of employees

These terms have deliberately not been defined, it should be borne in mind that PSAs were introduced as a practical and flexible solution to dealing with ‘one-off’ benefits.

Note. Items that are regarded as trivial should not be included in a PSA.

The regulations require the employer and HMRC to agree that payments are of an amount, or are made in circumstances, which satisfy one or other of the terms listed below. Guidance to help you to interpret these terms in relation to PSAs is provided in this manual as follows

The above terms cannot apply to any of the items listed below.

  • cash payments of wages
  • other cash payments such as long service awards
  • large benefits provided regularly to individual employees such as company cars, car fuel or beneficial loans
  • round sum allowances
  • shares, due to their complex tax legislation, it is not possible to make quick and easy decisions as to the nature of any charge arising or on the valuation of shares
  • payments into Funded Unapproved Retirement Benefit Schemes (FURBS)
  • items from which tax has already been deducted under PAYE
  • items which are already reflected in the employees tax code for that year
  • profits arising from various mileage payment schemes and other regular items arising in Employee Car Ownership Schemes.

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)