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HMRC internal manual

PAYE Settlement Agreements

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HM Revenue & Customs
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Dealing With PAYE Settlement Agreements

PSA2030 explains how to enter into a PSA with an employer, and tells you to notify the employer of the date by which they must provide the following details

  • the value of the items included in the agreement on which tax and Class 1B NICs is chargeable
  • the total number of employees in receipt of each specified amount
  • the number of those employees chargeable to each specified rate of tax
  • a computation of tax and Class 1B NICs calculated.

On receipt of a form PSA1 or equivalent you must

  • ensure the employer’s calculation includes only the expected items
  • make a sample check, using the amounts, rates of tax and numbers of employees to verify the tax and Class 1B NICs shown. You can use the PSA calculator on SEES to do this, see PSA1170

Creating a charge through SAFE

In all cases when you are satisfied that the calculation is acceptable you must

  • advise the SAFE nominee of details of the PSA charge to raise using this form
  • on receipt of the screen-print, you must check it to ensure that the charge has been correctly raised. If incorrect, assist the SAFE nominee to correct the charge
  • issue a letter to the employer confirming the amount due under the PSA, advising the due date and explaining that a payslip will be issued separately
  • follow the guidance at PSA6040 to update ECS.

19 October deadline

You should aim to create a charge through SAFE and issue a letter confirming the amount due before 19 October following the year concerned, see PSA1150 for more information about relevant dates.

Where agreement of the amount due is delayed beyond 19 October ask the employer to consider making a payment on account to minimise interest liability, see PSA2090.