PSA1120 - Overview of PAYE Settlement Agreements

Employer Record Keeping

Once a PAYE Settlement Agreement is agreed for a year an employer is no longer required to

• operate PAYE or Class 1/1A NICs on the expenses payments and benefits included in the PSA, or
• include those items on forms P9D or P11D and P11D(b).

However the employer must still retain suitable records of what has been provided or paid.

Items which can easily be attributed to individual employees

Where items can easily be attributed to individual employees the employer must

• retain the same records required for the purposes of completing P9Ds and P11Ds
• record details of cash payments to individual employees.

Items which cannot be attributed to individual employees

Where it is impracticable to allocate an item between employees, a record of the individuals concerned will not be needed. Instead the employer should record information about,

• the overall cost of providing the benefits concerned (for example the total cost of providing a party which a number of employees attend)
• the number of employees concerned, and
• representative samples of the tax rates of the employees involved.

Keeping Records

Regulation 117 (8) of The Income Tax (Pay As You Earn) Regulations 2003 states that employers must keep records relating to PSAs for not less than 3 years after the end of the most recent tax year to which they relate. You must ensure that employers are aware of what records to keep and how long they must keep them.