A PAYE Settlement Agreement (PSA) allows employers to make one annual payment to cover all the tax and National Insurance due on small or irregular taxable expenses or benefits for employees.

The expenses or benefits included in a PSA must be defined as one of the following;

• minor – e.g., a small birthday present;
• irregular – e.g., one-off relocation expenses over £8,000 (these are tax-free below £8,000); and
• impracticable (difficult to work out the value of or divide up between individual employees) – e.g., shared cars or taxi journeys.

Employers that are required to notify HMRC of the value of items included in a PAYE settlement agreement (PSA) must do so using form PSA1.

The deadline for applying for a PSA for 2021-22 expired on 5 July 2022. Any tax or National Insurance due for 2021-22 under a PSA must be paid electronically to clear into HMRC’s bank account by 22 October 2022. Employers that pay by cheque must ensure that the payment reaches HMRC’s Accounts Office by 19 October 2022.  There may be interest and / or a late payment penalty due where the payment is made late.

CIGMA Accounting

CIGMA Accounting Ltd is a forward-thinking accounting and tax firm based in London, dedicated to delivering high-quality compliance, tax planning, and business advisory services to entrepreneurs, landlords, and growing SMEs. With offices in Wimbledon and Farringdon, we combine local expertise with a tech-driven approach to simplify accounting. Our services include corporation tax filing, VAT compliance, HMRC investigation support, R&D tax credit claims, capital allowances optimisation, and bookkeeping automation. What sets CIGMA apart is our ability to blend traditional accounting rigour with AI-powered systems that reduce errors, save time, and provide real-time financial insights. Our team ensures that every client - from startups to high-net-worth individuals - receives a bespoke solution aligned with their growth goals. Whether you need strategic tax planning, help with HMRC disclosures, or a full outsourced finance function, CIGMA Accounting delivers clarity, compliance, and confidence.

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