HMRC Publishes Guidance to Help Employers Carry Out PAYE Settlement Agreement Calculations
HMRC has issued new guidance to help employers carry out compliant PAYE settlement agreement calculations. The guidance is intended to help employers lower the risk of tax non-compliance and reduce the likelihood of checks.
PAYE settlement agreements are statutory arrangements with HMRC, under which an employer can pay income tax and Class 1B National Insurance on minor benefits in kind and expenses payments given to their employees.
In November 2021, the government announced HMRC would produce guidance for compliance (GFC) and improve existing guidance in order to provide employers with greater transparency on high and low risk approaches in tricky areas. The intention was to explore with stakeholders which areas would benefit from further guidance and explanation.
On 6 October 2022 new GFC on PAYE settlement agreement calculations was issued. By following the GFC, employers can satisfy themselves that their approach to PAYE settlement agreement calculations is likely to be seen by HMRC as low-risk from a compliance perspective. The GFC explains HMRC's preferred method for submitting calculations (using form PSA1 which is to be submitted digitally). It also sets out ways to help employers reduce the risk of inaccuracies and errors in income tax and National Insurance under a settlement agreement.
