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HMRC internal manual

PAYE Settlement Agreements

National Insurance Contributions and PAYE Settlement Agreements: General

An employer who enters into a PSA is liable for the payment of Class 1 B NICs in addition to their liability to tax under the PSA. The legislation relating to Class 1BNICs is shown at PSA3020

Class 1B NICs are payable on

  • items within a PSA that ordinarily attract a Class 1 PSA3040 or Class 1A NICs liability, PSA3030
  • the total tax payable under a PSA

Class 1B NICs replace any Class 1 or Class 1A NICs liability attached to the benefits and expenses included in a PSA for tax purposes

Only items that attract a tax charge can be included in a PSA. You cannot use a PSA

  • where there is NICs only liability, or
  • to cover elements which have NICs only liability

More detailed information about Class 1B NICs can be found in the National Insurance Manual at NIM18000 onwards