Reviewing Your PAYE Settlement Agreement For COVID-19

If an employer wants to meet the tax on benefits and expenses for an employee, they use a PAYE Settlement Agreement, also known as a PSA. This is a very useful way to preserve the goodwill of a benefit ...

However, not all benefits are included within a PSA. Qualifying benefits should fall into one of the following:

- it's a minor benefit
- It is provided occasionally
- It is impractical to apply PAYE
- It is not possible to apportion a shared benefit

PSAs can be used to apportion the likes of an annual party which would fall outside any tax exemptions. The good news is that benefits exempt from tax need not be included.

Any Income Tax and National Insurance that is due on items listed on a PSA in 2020/21 must be paid by the 22nd of October 2021 for electronic payments and the 19th of October 2021 in other cases.

A PSA remains active and in place until cancelled or amended by either the employer or by HMRC themselves. PSAs should be reviewed every 12-months to ensure they are still valid.

"A PSA must be amended by the 6th of July!"

With the pandemic having such an effect on the economy, HMRC is not issuing new P626s in light of a COVID-19 related change to a PSA. Instead, they are issuing an appendix to the existing P626.

COVID-19 exemptions now include antigen testing as well as business equipment an employee has purchased for working from home.

If you'd like to find out more about anything I've written here, do call me on 01908 774323 or leave a comment below and let's see how I can help you.