May 2023

Where benefits in kind are provided to employees it will usually result in an income tax charge on the employee and a Class 1A national insurance (NI) charge on the employer. The rate to be used for 2022/23 is 14.53% because of the withdrawal of the 1.25% Health and Social Care levy part way through the year.

The income tax charge on the employee can be avoided by the employer entering into a PAYE settlement agreement (PSA) with HMRC, whereby the employer pays the income tax on the employee’s behalf. Not all benefits provided may be dealt with this way. The benefits must be minor, irregular, or impracticable. Impracticable means that the expenses and benefits are difficult to place a value on or divide up between individual employees. An example would be the costs of a staff party where the £150 per head limit has been exceeded.

From 6 April 2023 there is a new online service available from HMRC for employers and their agents to apply for a PAYE settlement agreement (PSA). Employers and agents can also use the online service to amend or cancel an existing PSA.  To support these changes, HMRC has updated its guidance on PSAs to include reference to the new online tools.

What can be included in the PSA depends on when you apply.  If you applied for a PSA before the start of a tax year, you can include any expenses and benefits contained in the agreement. If you applied for a PSA part way through the tax year, you may need to report some items separately on form P11D.

Employers must pay any tax and class 1B NIC owed under a PSA by 22 October after the tax year that the PSA applies to (19 October if paying by cheque).

Of course, we at Humphrey & Co are always on hand to assist you with providing and managing your tax information. However, we do recognise that there may be instances where you may need access to this tax information.  HM Revenue & Customs provide a secure online facility to allow individuals to check, update and manage their tax details, with the aim of contacting HMRC more quickly and easily.

The service allows you to:

• Check your income Tax estimate and tax code
• Check your state pension
• Check income from employment and how much tax you have paid in the previous 5 years
• Check or update your Marriage Allowance.
• Tell HMRC about a change of address
• Check or update benefits you receive from employments such as company car and medical insurance benefits.
• Find your NI number and Unique Taxpayer Reference (UTR) (if applicable)

To sign up , please visit Personal tax account: sign in or set up - GOV.UK (www.gov.uk)

To do so, you will need to register for a Government Gateway account and provide personal data to prove your identity. When applying for a Government Gateway account for the first time, you will need to provide your National Insurance number or postcode plus 2 of the following:-

• A valid UK passport
• UK Photocard driving licence issued by the DVLA
• A payslip from the last 3 months or P60 from your employer
• Details from a Self-Assessment Tax Return if you have submitted one previously
• Information held on your credit record
• Details of a tax credit claim if you made one

Once you have enrolled, you will then be able to access the Personal Tax account.