Advantages And Disadvantages Of A Paye Settlement Agreement
You can request PPE at any time, but the date of the agreement affects the points that can be covered. Are you preparing your P11d forms for 2012/13? Have you spent on one or more annual events for your staff, but have you passed the £150 per capita threshold for the exemption and you don`t want your employees to be taxed on the event? If so, a PAYE transaction agreement may be for you. A PPE is an annual voluntary agreement with HMRC that allows employers to settle certain tax liabilities on behalf of their employees. PPE is best suited for small benefits in kind, it cannot be used for benefits such as company cars, vans (with either exception, see below) and health insurance. A PAY or PSA transaction agreement is a flexible system that allows an employer to pay all taxes payable and NICs due to HMRC on three categories of expenses and benefits: employers begin the process by requesting HMRC to include certain benefits in a PPE. HMRC issues a formal contract to the employer which must be signed and returned to HMRC. This contract formalizes the agreement according to which the employer pays the tax and NIC debts on behalf of the employee. Currently, this can be done by writing to the employer`s tax inspector and informing the inspector that there is a desire to create PPE containing the benefits and expenses to be covered. And if agreed with the inspector, sign an agreement to confirm the decision. The national responsibility of Scottish taxpayers remains the same. However, from the 2017-2018 fiscal year, there are different tax thresholds for higher and additional tax brackets. Employers should be aware of this and use the corresponding rate threshold for the calculation of income tax. To apply for a new PSA, you can write to HMRC that you need PPE and describe the expenses and benefits that psa must cover.
Once HMRC has agreed on the costs and services to be covered by your PSA, it will authorise the agreement and send you a form signed P626. The decision must be confirmed before 6 July following the end of the fiscal year to which it relates. PPE can be agreed at any time during the tax year. However, benefits before the agreement cannot be included, but only benefits that were granted after the conclusion of the agreement. PPE may at any time until 5 July after the end of the respective fiscal year will be agreed with HMRC. For 2015/2016, as long as the agreement is in force until 5 July 2016, services can be invoiced through PSA instead of including it on form P11D. The role of the accountant in all this could be to inform his employer (or client) of the mechanisms available for the provision of advantages, advantages and disadvantages of each, and then to follow all the advantages granted. The administrative burden will likely fall on the accountant, so you can keep accurate and separate records of what is covered by PPE and what is defined as a trivial benefit. But the most important thing is to draw the employer`s attention to the options available, and you never know that there may soon be a “little something” for you under the company`s Christmas tree. For example, if you made available to an employee once in 2009, once in 2011 and again in 2014, free use of your operating holiday accommodation, this would be considered an irregular benefit and would fall under PSA.
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