Declaring your National Insurance Contributions via PSAs

Anees Hussain breaks down what you need to know about Pay As You Earn Settlement Agreements.

Following on from our previous blog relating to the particulars surrounding Form P11D, employers may alternatively wish to declare any taxable benefits-in-kind using what is known as a Pay As You Earn Settlement Agreements (PSAs). These can be used in instances where the employer provides a one-time or insignificant benefit to an employee, for instance staff functions where the costs exceed £150 per employee. In such circumstances, a taxable benefit will arise on the whole cost for the employee. It is often the case that employers will wish to settle the tax liability due on behalf of the employees, and these can be achieved via PSAs.

PSAs are an alternative to the Form P11D, and are an annual agreement that is entered into with HM Revenue & Customs. Much like Form P11D, the deadline for entering into a PSA is 6 July following the end of the tax year. Using PSAs also saves you from putting through the benefit through the payroll in order to calculate tax and National Insurance. These can be a beneficial mechanism for employers to settle their employee's tax liabilities; however there are strict rules and criteria outlined by HMRC on what can be declared using the PSAs. In addition, if the benefit is highly trivial, e.g. small gifts, then such benefits do not need to be declared at all.

This is where advice can prove to be helpful in not only understanding the process behind PSAs, but also saving valuable time for you to run your business. At Page Kirk we have a dedicated tax department who are able to support you to ensure that you meet all your obligations with HMRC. We have experienced professionals who are experts in their field and can ensure that any tax-saving opportunities are maximised.