PAYE Settlement Agreement- PSA

A PAYE Settlement Agreement (PSA) allows you, as an employer, to make an annual payment to cover all the tax and National Insurance due on minor, irregular or impracticable expenses or benefits for your employees.

Class 1B national insurance is due on PSA’s which means that the expense or benefit does not need to be included on P11D form nor does it need to go through payroll, as such Class 1A National insurance is not due.

Minor expenses include:

  • Incentive awards such as long-service
  • Telephone bills
  • Small gifts or vouchers
  • Staff entertainment
  • Business expenses whilst travelling
  • Trivial benefits

Irregular expenses include:

(Things that employees do not have a contractual right too.)

  • Relocation expenses over £8,000 (£8,000 is tax free)
  • The cost of attending overseas conferences
  • Expenses of a spouse accompanying an employee abroad
  • Use of a company holiday flat

Impracticable expenses include:

(Difficult to place a value or split between employees)

  • Staff entertainment
  • Shared cars
  • Personal care expenses

A PSA cannot include:

  • Bonuses
  • Round sum allowances
  • Beneficial loans in PSA

If you feel like this is something PJCO can help you with, please let us know! Call us on 01273 441 187


Amy Manvell PJCO Peter Jarman
Amy Manvell
Robert Kiyosaki

The word accounting comes from the word accountability. If you are going to be rich, you need to be accountable for your money.

Robert Kiyosaki