PAYE settlement agreements - threshold change for Scottish rate tax payers and simplification

23 August 2017

PAYE settlements agreements (PSA) allow employers to agree with HMRC that they will pay one payment, on behalf of their employees, that will cover all tax and NICs that fall due on agreed small or irregular taxable expenses and benefits – subject to them meeting relevant criteria.

For the 2017-18 tax year, the higher rate threshold for Scottish rate tax payers is different to the threshold for the rest of the UK.

If you have employees whose main residence is in Scotland they can ensure the HMRC have their accurate address details by updating HMRC.

Electronic payments to settle your PSA calculation for the tax year ending 5 April 2017 must be cleared in to HMRC bank accounts by 22 October which in 2017 falls on a Sunday, cheque payments must be received by HMRC by no later than 19 October 2017. Late payments may incur interest charges or a late payment penalty.

HMRC will issue you will a reference number on the payslip to use to make your PSA payment and this must be used to ensure accurate reconciliation.

PSA settlement process simplification

During 2016 HMRC consulted on their proposals that aimed to significantly simply the PSA process and also move it from a manual process to a digital platform.

HMRC are currently working on their digital solution and are interested in speaking to CIPP members who compile the information required for the PSA as well as make the PSA submission to enable them to better understand:

  • The current process involved in filing a PSA
  • Timescales for PSA submission
  • The effectiveness of the current guidance

A roundtable meeting is being held with HMRC in London on 18 September 2017 and an invitation will be sent out in the next day or so. If you wish to attend please reply promptly to the invitation as places are strictly limited and so will be allocated on a first come first served basis.

If you have any questions about this meeting or would like to submit comments about your experience of working with PSAs please contact Samantha Mann, CIPP senior policy and research officer by email.