1. Overview

A PAYE Settlement Agreement (PSA) allows you to make one annual payment to cover all the tax and National Insurance due on small or irregular taxable expenses or benefits for your employees.

If you get a PSA for these items you won’t need to:

  • put them through your payroll to work out tax and National Insurance
  • include them in your end-of-year forms P9D and P11D
  • pay Class 1A National Insurance on them at the end of the tax year (you pay Class 1B National Insurance as part of your PSA instead)

Some employee expenses are covered by exemptions (which have replaced dispensations). This means you won’t have to include them in your end-of-year reports.