Calculating Paye Settlement Agreements

For THMC`s experts, advising companies on tax issues such as this agreement is a daily occurrence. If you would like to know more or have a conversation about something related to accounting, please call us on 0800 470 4820 or email It is in the interests of both Scotland and Wales to ensure that income tax revenues are maximised in order to finance public services in these countries. In this context, it is important that PSA calculations are carried out as accurately as possible according to the staff regulations. From April 2016, employers should have calculated the share of the PSA applicable to Scottish taxpayers on the basis of Scottish tax rates (and bands from April 2017). If the employer has workers established in Scotland for tax reasons and workers established in the rest of the UNITED KINGDOM, two separate PSA calculations should be made, one for Scottish taxpayers and the other for ruk taxpayers (Rest of UK). The Scottish taxpayer`s gift cost the net amount plus £60 + £15.95 = £75.95. It is this amount that is used to calculate the NCI of employers and workers as follows: PAYE Arrangement Agreements (PPE) are often used by employers to maintain compliance with employee expenses and benefits. By entering into this formal agreement, an employer can pay all taxes due on expenses and benefits made available to employees through an annual deposit and payment to HMRC. The cost to the non-Scottish taxpayer (additional tariff) is £60 + £49.09 = £109.09 plus the employer`s NICs of £15.05 and the employee`s NICs of £2.18, which represents a total cost of £126.32. Properly used, PAY settlement agreements can be an effective and effective way to reward staff for these unique opportunities. Only take into account the tax status of employees when calculating taxes and NICs due. Prior to the partial transfer of income tax to Scotland in April 2016, no individual calculation or precise figure was needed – suffice it, for example, to say that a benefit of £300,000 had been granted and that around 20% of the beneficiaries were higher rate taxpayers, the rest being the base rate.

This was a relatively simple way for employers to pay on what was due and proved to be a success in generating income. If an employer is certain that it does not have employees who are Scottish or Welsh taxpayers (see below), this remains the case. In Wales, the Welsh income tax rate will apply from 2019/20, but was no different from the rest of the UK. HmRC, however, stated in its October 2019 Employer Bulletin that a separate calculation for Welsh taxpayers must be established in the same way that employers must already do for Scottish taxpayers. Psa liability is calculated using a PSA1 form. This is usually requested by HMRC and agreed during the months of July and August, so that liability can be settled until 19 October (postal payments) or 22 October (electronic payments) after the tax year in which the services were performed. Note that for taxpayers with higher and additional rates (maximum rate in Scotland), paying tax and NICs with PPE can be costly due to the extrapolation process which can almost double the cost of making the initial benefit available. Items included in PPE should not be accounted for separately, for example. B through the pay slip or in the employee`s P11D. Instead of being imposed on the employee through the P11D procedure, they are imposed by this annual statement on the employer. Instead of the Class 1A NCI being due through P11D(b), the value of the benefits is subject to Class 1B (NCI) social security contributions. .

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