PAYA compensation agreements (PAYA) are often used by employers to maintain compliance with employee cost and social benefits procedures. By entering into this formal agreement, an employer can pay any tax due on expenses and benefits to workers through an annual submission and payment to the HMRC. The contract will continue until you or HMRC have to terminate or amend it. You don`t need to renew the PSA every tax year. Hmrc launched a consultation in August 2016, following which some changes were made to the PSA process. The most important change from 2018/19 was that PPE is now a “permanent agreement”; That is, they should not be renewed every year as long as they are needed or if hmrc does not cancel them. Changes to the benefits listed require a new agreement. If you don`t have a PSA agreement yet, our team of labour tax specialists can help you set up and contact HMRC to make sure the agreement contains everything you want to include now and in the future. From April 2018, the annual process for renewing PPE contracts has been simplified, so employers are not required to agree to a PSA with HMRC each year if the categories remain the same. Under the agreement, the EPI will remain in place until the employer or HMRC terminates or amends it. To manage their resources, HMRC requests calculations that are submitted annually until a specified date that may differ by agreement, but which is usually July 31 or August 31.
It is interesting to note, however, that there is no legal time limit for submitting calculations, so no penalty can be imposed for not presenting your calculation until that date. They must submit an annual calculation of the income tax payable and the Class 1B NIC. HMRC will verify the calculation and confirm the consent if the basic calculation appears to be correct. There is a legal deadline for paying tax and NIC due. This date is set for October 19. If the tax payable on that date is not paid, penalties and interest are charged. You must agree with HMRC on the type of expenses and benefits you wish to include in the PPE before the annual deadline.