PART 6PAYE SETTLEMENT AGREEMENTS

Payment of tax under PSA

Calculation of tax payable under PSAI1108

F61

A PSA must provide that the employer is accountable to HMRC for the income tax due.

F41A

A PSA must provide for the sums due to be—

a

computed annually in accordance with the factors specified in paragraph (2), and

b

comprised of the amounts specified in paragraph (3)

2

The factors are—

a

in the case of qualifying general earnings comprising sums paid in respect of expenses, the estimated aggregate amount of such payments on which income tax is chargeable, reduced by such amount (if any) as would have been deductible if the qualifying general earnings had not been included in the PSA;

b

in the case of qualifying general earnings comprising benefits provided or made available, the estimated aggregate amount of the cash equivalents and other amounts on which income tax is chargeable, reduced by such amount (if any) as would have been deductible if the qualifying general earnings had not been included in the PSA;

c

the total number of employees in receipt of qualifying general earnings comprised in the PSA;

F3d

the number of those employees respectively chargeable to income tax—

i

at only the basic rate for the tax year to which the F7computation relates, and

ii

at both the basic rate and the higher rate for that tax year; F1and

iii

at the basic, higher and additional rates for that tax year;F9and

F5iv

at any Scottish rate applicable for the tax year to which the computation relates; F11and

F10v

at any Welsh rate applicable for the tax year to which the computation relates;

e

such other matters as are agreed by F2HMRC and the employer to be relevant in relation to the qualifying general earnings comprised in the PSA.

3

The amounts specified for the purposes of F8paragraph (1A)(b) are—

a

an amount equal to income tax on the aggregate of the amounts computed in accordance with paragraph (2)(a) and (b), calculated so as to take account of the factor specified in paragraph (2)(d); and

b

a further amount reflecting an estimate of the income tax on the benefit to the employees of having no tax liability on the qualifying general earnings included in the PSA.