Minor Benefits and Expenses

• Employee incentive awards (e.g. a long service award or gift).
• Occasional and small non-cash gifts and vouchers.
• Staff entertainment (e.g. a ticket to sporting event).
• Non-business expenses for an overnight business trip (over daily limit).
• Telephone bills.

Note: Pre-set monetary limits do not define the valuation of ‘minor’’ items. Use objective judgement to decide whether it is minor in value. The treatment of tax on trivial benefits means they do not get included in a PSA.

Irregular Benefits and Expenses

Items not paid for at regular intervals throughout a tax year (e.g. weekly or monthly) may qualify for your PAYE Settlement Agreement as irregular inclusions.

As a rule, they would be expenses or benefits that employees have no contractual right to receive. Some common examples of irregular expenses and benefits would include the cost to:

• Relocate, if it amounts to more than £8,000 (relocation expenses up to £8,000 are tax free benefits).
• Use a holiday flat owned by the company.
• Attend a work related conference overseas. The same would apply if a spouse accompanied the employee on the trip abroad.

Note: Consider the nature of the item and the usual frequency of paying for it across the workforce to determine its qualification.

Impracticable Expenses and Benefits

Impracticable expenses and benefits tend to be items that are difficult to share between the workforce. Finding it hard to place a true value on an impracticable item may also qualify it for a PSA, such as:

• Personal care expenses (e.g. paying for hairdressing services).
• Sharing company cars.
• Staff entertainment that does not get an exemption from tax or National Insurance Contributions.

Note: The ‘impracticability’ of these items tends to make them difficult for employers to operate PAYE on them. Their complexity also makes them hard to apportion a share of the benefits between employees.

Items a PSA Does Not Include

PAYE Settlement Agreements do not include employee salary, wages, or other high-value benefits (e.g. company cars). Neither do they include cash payments relating to:

• Round sum allowances
• Beneficial loans in a PSA
• Staff bonuses

Extra restrictions on what you can include in a PSA may apply on deadlines and payment if the application starts after the beginning of the tax year.

Note: Employers need to report most expenses and benefits they provide to employees. Check out the complete A to Z list of expenses and benefits to confirm whether you must pay tax and National Insurance on them.