Once a PSA is agreed with HMRC, it remains in effect for future fiscal years until it is varied or revoked by HMRC or the employer. Any gift or benefit given to a worker who relates to his or her benefit attracts an income tax and an NIC liability that, in some cases, an employer cannot pass on to an employee. In this case, an employer is required to assume this responsibility for taxes and NICs through a paya settlement contract (PAYA). BDO has extensive experience and knowledge in this area. If you have any questions, please contact your regular BDO advisor or Stephanie Wilson or Mark Seaden. PAYA compensation agreements (PAYA) are often used by employers to maintain compliance with employee cost and social benefits procedures. By entering into this formal agreement, an employer can pay any tax due on expenses and benefits to workers through an annual submission and payment to the HMRC. Send the completed form to HMRC as soon as possible after the end of the fiscal year. You will be in contact with you before October 19, after the fiscal year that covers the EPI, in order to validate the total tax and national insurance that you must pay. To apply for an PPE, an employer must provide information on the assets to be included in an application with HMRC, including: PPE remain in effect in the coming years until they are cancelled.
Employers must therefore agree with HMRC on all benefits or expenses that are not included in the previous year. If you don`t have a PSA agreement yet, our team of labour tax specialists can help you set up and contact HMRC to make sure the agreement contains everything you want to include now and in the future. Payments due for an PPE must be paid by October 22 following the tax year in which it is applicable (October 19, if on the postal service). Fines and interest may be due after that date. Given the current pandemic, HMRC recommends that Covid-19 be considered a reasonable excuse as to why payments are late. Each case is subject to individual review and fines and interest may be withdrawn under payment. For more details on reasonable excuses for late payments, click here. The value of the services provided should be taxed under the EPI at the marginal tax rates of each worker concerned. It is therefore important that tax rates for workers residing in each of the UK countries are also taken into account, as deceded governments (currently Scotland and Wales) are able to set the tax rates payable by taxpayers based in those countries. However, the popularity of these gifts and events among employees would decrease if they were to control.
The EPI transfers tax and NIC responsibility for these benefits to the employer, so that the employee benefits from the tax-free benefit or NIC. For example, the total cost of providing a $100 PSA gift to a 40% taxpayer is about $190. The contract will continue until you or HMRC have to terminate or amend it. You don`t need to renew the PSA every tax year. An PPE is a very effective simplification of spending and benefit processes that allows you to reduce reporting obligations, ensure adequate management of HMRC compliance and assist in employee compensation, as they do not receive taxes or NIC on articles contained in the EPI.