Paying tax and National Insurance due under your PSA
If you agreed a PAYE Settlement Agreement (PSA) with HMRC for 2020/21, you will need to pay the tax and Class 1B National Insurance that is due in October 2021. The deadline for paying the tax and National Insurance is 22 October if you make your payment electronically, or 19 October if you pay by cheque. Remember, your payment must reach HMRC by the deadline. Payment can be made online via the Gov.uk website. Alternatively, you can make your payment by online or telephone banking, at your bank or building society, using a debit or corporate credit card, or by cheque.
Calculating the tax and Class 1B National Insurance due
A PSA allows you to meet the tax liability on certain benefits and expenses on behalf of your employees. As payment of tax on an employee’s behalf is itself a benefit in kind, you also need to pay tax on that tax. Consequently, when working out the tax due under the PSA, you need to gross up the tax payable at your employees’ marginal rates of tax.
Class 1B National Insurance is due on items included within a PSA that would otherwise be liable for Class 1 or Class 1A National Insurance. It is also payable on the tax due under the PSA. Class 1B National Insurance is payable at the rate of 13.8%.
Contact us to find out how to work out what you need to pay under your PSA for 2020/21, and how to make the payment.