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Employers reminded to make PSA payments by 22 October

25 September 2020: Employers with a PAYE settlement agreement (PSA) in place should not wait for a payslip from HMRC before making a payment to avoid interest and late payment penalties, warns ICAEW’s Tax Faculty.

Tax and Class 1B national insurance contributions due on a PSA for the 2019/20 tax year must clear HMRC’s bank account by 22 October 2020 to avoid interest charges and/or late payment penalties. The deadline for paying by post is 19 October 2020.

PSAs allow employers to make one annual payment to cover all the tax and national insurance due on minor, irregular or impracticable expenses or benefits provided to employees such as small gifts and staff entertaining.

In is understood that some employers with a PSA in place may not have received a payslip from HMRC confirming the amount owed under their PSA arrangement for the 2019/20 tax year.

Employers in that situation are advised by the Tax Faculty to pay the tax and national insurance based on the amount that they calculated and submitted for their PSA to HMRC rather than waiting for the payslip. Details about how to pay the tax and national insurance due on the PSA can be found on gov.uk.

Employers should ensure they quote their PSA reference number, which is shown on their PSA confirmation letter when making their PSA payment; not their PAYE Accounts Office reference.

This is because payments received with the PAYE Accounts Office reference are allocated to their normal PAYE account and they will continue to receive reminders for the PSA payment even though they have paid.

Employers that do not have their PSA reference number should contact the PSA team on 0300 322 7077.