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 an 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 agreementon 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. You should enclose the form PSA1 for the employer to use.
  • 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.
Home | Main Contents | Manual Contents
Previous Page | Next Page | Top | Menu