PSA1170 - Overview of PAYE Settlement Agreements
Example Calculation
The PSA calculator on SEES will calculate the tax and Class 1B NICs due under a PSA from 2008-09 onwards. You just enter the type of the benefit or expense paid in the 1st column and the value of the amounts applicable to basic rate (in Column B) and higher rate (in Column D) and the calculator does the rest.
The following example shows how to calculate the tax and Class 1B NICs payable under a PSA for 2007-08:
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.
| 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 |
