A PAYE settlement agreement (PSA) is not an alternative to the normal tax and NICs rules for expenses and benefits. So items like salary, wages, bonuses, round sum expenses and major benefits provided regularly (a company car, for example) cannot be included in a PSA.

To be included in a PSA, an expense or benefit must be:

• minor, for example
  • a present for an employee in hospital
  • small gifts, or
• irregular, for example
  • occasional use of a company holiday flat
  • one-off gifts, or
• one for which it is impracticable to operate PAYE or it is difficult to value, for example
• Christmas parties and similar entertainment you provide and which does not already qualify for tax relief
• free chiropody care.