Hey there! Ever heard of PSA (Payroll Settlement Agreements)? No worries if it’s a new term. We’re here to break it down into easy-to-understand bits.
Let’s Start with PSA Basics
PSA is like an optional deal that employers can use to handle small or irregular perks and expenses. Instead of getting into complex paperwork (P11Ds), they sort it out in a friendlier way.
Why Do Employers Like PSAs?
Simple! PSAs make life easier. Less paperwork (goodbye P11Ds!), and employees don’t have to deal with the tax and NIC costs. Win-win!
How Does PSA Actually Work?
In a PSA, employees can kick back because they don’t have to worry about tax or NICs. The boss takes the wheel, settling the tax (grossed-up style) and Class 1B NICs with HMRC once a year. This keeps those items off employees’ P11Ds.
What Goes into a PSA?
The stuff in a PSA depends on the agreement between the boss and HMRC. It’s usually perks that are a bit odd, irregular, or just tricky to pin down for tax (PAYE) purposes.
When and How to PSA
PSAs need a bit of planning. They have to be set up before the tax year starts. The boss writes to HMRC listing what they want to include.
Important Dates and Money Talk
Once a year, usually around July or August after the tax year ends, the boss sends the tax and NICs calculations to HMRC. The tax bill and NICs need to be settled by 19 October after the tax year ends.
What’s in the PSA Mix?
A bunch of stuff! Vouchers over £50, team outings with some work chat, staff parties with a bit of a fancy touch, and more can be in the mix.
In a Nutshell PSA is a cool tool for employers to handle the little extra things in a simpler way. Less stress, less paperwork. Just remember, this info here isn’t financial or tax advice. For the real deal, chat with a tax expert or HMRC. Easy peasy!
If you want a more detailed guide of what can and can’t be included get in touch, or speak to our friendly team who will guide you through this every step of the way.