Paye Settlement Agreement Relocation: What You Need to Know
If you are an employer who has recently relocated your business, or you are planning to do so in the near future, there are a few important tax considerations that you should be aware of. One of these is the Paye Settlement Agreement (PSA), which is a useful tool for streamlining your company`s tax administration and reducing the administrative burden on your finance team.
What is a Paye Settlement Agreement?
A Paye Settlement Agreement is an agreement between an employer and HM Revenue & Customs (HMRC) that allows the employer to make a single annual payment to cover the tax and National Insurance contributions (NICs) on certain items or expenses provided to employees. This can include things like Christmas parties, staff entertainment, and small gifts. By using a PSA, the employer can save time and money by avoiding the need to report these items individually through the Pay As You Earn (PAYE) system.
Why is a PSA important for relocated businesses?
If your business is relocating, you will need to register a new PAYE scheme with HMRC. This can be a time-consuming process, as you will need to provide details of your new location and any changes to your payroll. If you are also planning a significant expansion or restructuring of your business, you may find that you have additional tax liabilities to manage.
By entering into a PSA, you can simplify your tax administration by consolidating your tax liability into a single payment. This can reduce the risk of errors or clerical mistakes, which can be costly and time-consuming to correct.
How do you apply for a PSA?
To apply for a PSA, you will need to contact HMRC and provide details of the items or expenses you wish to cover. HMRC will then review your application and issue a PSA reference number if approved. You will need to include this reference number on your annual PSA return, which should be submitted to HMRC by 6 July following the end of the tax year.
It`s worth noting that there are some items and expenses that cannot be covered by a PSA, such as salary sacrifice arrangements, loans to employees, and the cost of travel to and from work. You should check HMRC`s guidance on PSAs to ensure that you are including the correct items in your application.
In conclusion, if you are a relocated business, a PSA can be a useful tool for streamlining your tax administration and reducing the risk of errors or omissions. By consolidating your tax liability into a single payment, you can save time and money, and free up your finance team to focus on other areas of your business. Contact HMRC today to find out more about how a PSA could benefit your business.