PSA1080 - Overview of PAYE Settlement Agreements: Interpretation of 'impracticable'

PSA1050 explains that a payment of expenses or benefits in kind can be included in a PSA if it is ‘impracticable’ to operate PAYE with regard to the sums paid or the type of benefit provided. This section aims to help you to interpret that term.

Expenses or benefits - whatever their value - may by included in a PSA if it is ‘impracticable’ for the employer to

  • operate PAYE on that item, or
  • to identify how much of a shared benefit is attributable to a single employee and include it on a P11D.

Where employers request that such items are included in a PSA they must demonstrate that they cannot follow normal procedures without a disproportionate amount of effort or record keeping. It is not sufficient for an employer merely to claim that is inconvenient or difficult to follow normal procedures.

When considering an employer’s request you should take account of all the facts, including the value and nature of the items involved and the number of employees concerned, before making your decision.

The list below is provided to assist you in making your decision, it shows examples of what may constitute an impracticable item

  • free chiropody care
  • hairdressing services
  • Christmas parties and similar entertainment provided by the employer which do not already qualify for relief
  • cost of shared taxis home which do not satisfy s248 ITEPA 2003
  • shared cars.

This list is for illustrative purposes only it is not exhaustive.