PAYE Settlement Agreement
Employment taxes update
In today’s economic climate, where salary reductions and freezes are the norm, employers
find themselves limited in their options when it comes to rewarding employees for that ‘extra
mile’ that they may have taken on behalf of the employer. If an award is put through the payroll the employee is liable to tax (as it would be considered a Benefit-in-Kind).
The full benefit of the award may not be felt by the employee if they are required to pay tax on it. Employers, therefore, may decide to ‘pick up the tab’ and pay the tax on behalf of the employee. One option available to an employer is a PAYE Settlement Agreement (“PSA”).