PAYE Settlement Agreements

March 11, 2026 · WOWERI

A PAYE Settlement Agreement is an agreement between an employer and HMRC. It allows the employer to calculate and pay taxes on behalf of their employees. Let's break down what it is and how to deal with it.

What is a PAYE Settlement Agreement?

A PAYE Settlement Agreement (PSA) is an agreement between an employer and HMRC that allows the employer to calculate and pay taxes on behalf of their employees. This type of agreement is usually used when an employer provides their employees with certain benefits or perks that are not taxable.

How to work with a PAYE Settlement Agreement

To work with a PSA, the employer must submit an application to HMRC. The application must include information about the benefits or perks provided to employees, as well as the method of calculating and paying them.

Benefits of a PAYE Settlement Agreement

Using a PSA can have several benefits for employers. For example, it allows them to calculate and pay taxes on behalf of their employees in a simplified manner. Additionally, a PSA can help employers avoid penalties and fines for late payment of taxes.

What documents are required to apply for a PAYE Settlement Agreement

To apply for a PSA, the employer must provide the following documents:

• Application for PSA
• Information about the benefits or perks provided to employees
• Method of calculating and paying benefits or perks
• Other documents that may be requested by HMRC

Source: gov.uk