A PAYE Settlement Agreement (PSA) allows an employer to settle the tax on certain benefits and expenses on the employee’s behalf. This can be useful, for example, to generate goodwill and preserve the beneficial nature of a benefit. Items included in a PSA do not need to be reported to HMRC on the employee’s P11D.

The administration of PSAs has been simplified such that it is no longer necessary to set up a PSA each year. Once a PSA is in place, it is an enduring arrangement until such time as it is changed by either the employer or HMRC.

Contact your professional adviser to discuss how a PSA can help you save work.