PSA2030 - Dealing With PAYE Settlement Agreements
Entering into a PSA
When you and the employer have agreed the scope of a proposed
PSA the Regulations require the details of the agreement are set
out in writing. A form P626 should be used for that purpose. The
result will be a PAYE Settlement Agreement.
Take the following action
- complete form P626
- set out the specific items to be covered, for example, occasional use of a company holiday flat
- issue two copies of the PSA to the employer
- ask the employer to sign and return both copies
- create an ECS/PSA record to show the proposed items see PSA6020.
P626 returned by employer
On receipt of the signed P626 from the employer
- arrange for both copies of the form to be signed by the PSA Authorising Officer. See PSA2050
- the Authorising Officer must be a Higher Officer or above
- then return one copy of the form to the employer with a covering letter confirming that the agreement is in place
- notify the employer of the date by which the following details must be provided
- the value of the items included in the agreement on which tax and Class 1B NICs is chargeable
- the total number of employees in receipt of each specified amount
- the number of those employees chargeable to each specified rate of tax
- a computation of tax and Class 1B NICs calculated.
- keep the remaining copy in the employer’s file
- BF your records to be reviewed at the notified date
- update the ECS record to show
- which items have been included or rejected, and
- the date the P626 signed by the Authorised Officer was sent back to the employer, see PSA6030
On receipt of a full response by the employer follow the
guidance at
PSA2040
If no reply is received by the notified date
- contact the employer to remind them what details are required, review the case after one month
- if there is no reply after one reminder you must consider making a formal determination under Regulation 110 based on estimated figures, follow the guidance at PSA4030.
