PSA1050 | Overview of PAYE Settlement Agreements: What can and cannot be included in a PSA

From HM Revenue & Customs · PAYE Settlement Agreements

A PSA does not replace the requirement that employers must operate PAYE on general earnings and return details of expenses and benefits in kind on forms P11D and P11D(b).

General earnings that may be considered for inclusion in PSA consist of

taxable benefits provided or made available by reason of employment with the employer
expenses paid to those employees

Such items can be included if they satisfy one or other of the following terms

minor, or
payable on an irregular basis or
given in circumstances where it is impractical to apply PAYE or apportion the value of particular benefits which have been shared by a number of employees

These terms have deliberately not been defined, it should be borne in mind that PSAs were introduced as a practical and flexible solution to dealing with ‘one-off’ benefits.

Note. Items that are regarded as trivial should not be included in a PSA.

The regulations require the employer and HMRC to agree that payments are of an amount, or are made in circumstances, which satisfy one or other of the terms listed below. Guidance to help you to interpret these terms in relation to PSAs is provided in this manual as follows

for ‘minor’ see PSA1060
for ‘irregular’ see PSA1070
for ‘impracticable’ see PSA1080
for ‘trivial’ see PSA1090

The above terms cannot apply to any of the items listed below.

cash payments of wages
other cash payments such as long service awards
large benefits provided regularly to individual employees such as company cars, car fuel or beneficial loans
round sum allowances
shares, due to their complex tax legislation, it is not possible to make quick and easy decisions as to the nature of any charge arising or on the valuation of shares
payments into Funded Unapproved Retirement Benefit Schemes (FURBS)
items from which tax has already been deducted under PAYE
items which are already reflected in the employees tax code for that year
profits arising from various mileage payment schemes and other regular items arising in Employee Car Ownership Schemes.

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)