ECH15010 - Expenses, Benefits and Pecuniary Liabilities: Pecuniary Liability Payments

An employer may settle an employee's pecuniary liability. See EIM00580 for a definition.

The employer cannot operate PAYE in these circumstances but Class 1 NICs are still due.

Where an employer gives an employee cash for settlement of the employee's bill this is not a pecuniary liability. See EIM00590. PAYE should be operated in these circumstances and Class 1 NICs accounted for.

Where the employer has not treated the payment correctly the ECO should

• explain how to make any necessary open year adjustments ECH9010
• seek recovery where appropriate for closed years.