HMRC consultation on simplifying the PAYE Settlement Agreement (PSA) process

This HMRC consultation sets out proposals to reform the PAYE Settlement Agreement (PSA) process, to:

  • make it simpler for both employers and HMRC to administer PSAs
  • provide greater clarity about what can and cannot be included in a PSA.

The Government is not proposing to extend the scope of what can be included in a PSA as part of this consultation. However, this will be kept under review. If respondents have any comments, suggestions or observations on other aspects that are not covered in this document, they can include them in their response to this consultation.

The consultation has now closed. In December 2016, the Government published a summary of responses document which concluded:

  • Overall, respondents welcomed the proposals and the opportunity to comment on them.
  • Respondents welcomed the proposal to remove the requirement to agree PSA items in advance, every year and the majority would like the paper return, used currently, replaced by a digital return.
  • Many respondents would like better guidance that could assist employers in establishing what benefits are appropriate for inclusion within a PSA.
  • Many respondents expressed disappointment that the government did not propose to consider extending the scope of what can be included in a PSA, as part of this consultation.
  • One option that the government is considering is the alignment of the PSA calculation and payment dates with the P11D/P11D (b) deadlines. The majority of those expressing a view on this option were not in favour of it. In their view, it would impose an unreasonable burden on employers.
  • Many respondents said that removing the ‘minor’ criterion could potentially exclude some items that do not readily fit within the remaining PSA criteria.