HMRC Approval Dates for PSA Agreements
HM Revenue and Customs can approve the PAYE Settlement Agreement for employers before the start of the tax year (6th of April).
In this case, you would be able to include any employee expenses and benefits that are already contained in the PSA agreement.
So, what happens if HMRC approve the PSA after the tax year has already started? In this situation, as an employer you would usually need to make a separate report for some of the items.
Important: The 5th of July (following the first tax year that it applies to) is the deadline for applying for a PAYE Settlement Agreement (PSA).
PSA Approved Before 6th of April
You need to use ‘Form P11D‘ if your PSA was approved before the 6th of April. The form allows employers to report employee expenses and benefits provided before the agreement date that were:
- Already included in the tax code of the employee.
- Included in the employee’s PAYE tax and National Insurance deductions.
- Meant to be included in the PAYE tax and National Insurance deductions for the employee.
PSA Approved April 6th to July 5th
What if the PSA was approved between the 6th of April and the 5th of July? In this case, you need to use form P11D to report employee expenses and benefits given throughout that particular tax year that were:
- Already included in the tax code of the employee.
- Included in the employee’s PAYE tax and National Insurance deductions.
- Meant to be included in the PAYE tax and National Insurance deductions for the employee.
When to Pay Tax and National Insurance
Employers must pay a PAYE Settlement Agreement before the deadline. The time limit for any tax and National Insurance owed under a PSA is the 22nd of October after the tax year to which the PSA applies. The deadline is the 19th of October if you plan on paying by postal methods.
Failing to pay a PAYE Settlement Agreement, or paying late PSAs, can result in a fine or interest charges.
How to Change or Cancel a PSA
You can change the items covered under a PAYE Settlement Agreement. You would need to send the details of any changes to the same office that issued it.
After changing a PSA, HM Revenue and Customs would send a revised P626 to you that would need signing and returning back to them.
Cancelling a PAYE Settlement Agreement
Fill in the return slip section of the P626 form if you want to cancel a PAYE Settlement Agreement. Send it to the Business Tax Operations (PSA Team) at HM Revenue and Customs.
Note: Whatever date you put on the PAYE Settlement Agreement return slip would be the date that HMRC cancel it. Use the P11D form and the PSA1 form to report any outstanding tax and NICs due on benefits and expenses.
As an employer, you may still be providing benefits after cancelling a PSA. If so, you would either need to report them on a P11D form or put them through your employee payroll system to pay any tax or NICs due by PAYE.
ALSO IN THIS SECTION
Apply for a PSA | Check the details you need to include when writing to HMRC Business Tax Operations.
HMRC PSA Guide | Find out how PSAs allow annual payments for some types of employee expenses.