PSA1170 - Overview of PAYE Settlement Agreements
Example Calculation
An example of how to calculate the tax payable under a PSA is
shown here:
An employer makes benefits payments of £50 to 1000 of
their employees. A PSA is agreed on the basis that the payments are
minor.
The employer states that
- 800 employees pay tax at the basic rate
- 200 employees pay tax at the higher rate
the benefit attracts Class 1A NICs.
The tax and Class 1B NICs payable under a PSA would be as
follows:
| Tax Payable | |
| Benefits valued at £50 provided to 800 basic rate employees, total value | = £40000.00 |
|
Tax due @ 22% on total value of benefits of £400000 | = £ 8800.00 |
|
Grossed up tax £8800 x 100/(100-22) | = £11282.05 |
| Benefits valued at £50 provided to 200 higher rate employees, total value | = £10000.00 |
|
Tax due @ 40% on total value of benefits of £10000 | = £ 4000.00 |
|
Grossed up tax £4000 x 100/(100–40) | = £ 6666.67 |
| Tax Payable £11282.05 + £6666.67 | = £ 17948.72 |
| Class 1B NICs Payable | |
| Value of items attracting Class 1A NICs £50 x 1000 employees | = £ 50000.00 |
|
Add grossed up tax payable £17948.72. Total liable to Class 1B NICs | = £ 67948.72 |
| Class 1B NICs payable £67948.72 @ 12.8% | = £ 8697.43 |
| Total payable in the PSA; Tax £17948.72 + Class 1B NICs £8697.43 | = £ 26646.15 |
