Articles contained in an EPI should not be reported separately, for example. B on the payroll or in the employee`s P11D. Instead of being taxed on the worker through the P11D process, they are taxed through this annual compensation to the employer. Instead of not paying Class 1A through P11D (b), the value of benefits is subject to National Insurance Class 1B (NIC) contributions. 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. Taxable items that may be included in an PPE are as follows: the deadline for the transmission of PSA income tax calculations and NIC calculations to HMRC is indicated in the agreement and is generally set for July 31 following the end of the fiscal year. Psa`s liability payment deadline is October 22 after the end of the fiscal year or October 19 if the employer does not pay electronically. The current programme of tax decentralisation in the UK from Westminster to Scotland, Wales and Northern Ireland (NI) has so far included the partial decentralisation of income tax for Scotland and Wales from 2016 and 2019. Income tax rates were not delegated to NI.

If HMRC authorizes an PPE before the start of a fiscal year, employers may include all expenses and benefits contained in the agreement. Any gift or benefit given to a worker who relates to his or her benefit attracts an income tax and an NIC liability that, in some cases, an employer cannot pass on to an employee. In this case, an employer is required to assume this responsibility for taxes and NICs through a paya settlement contract (PAYA). You must agree with HMRC on the type of expenses and benefits you wish to include in the PPE before the annual deadline. If HMRC accepts the application, you submit to HMRC a calculation of the tax and NIC due on a gross basis at the corresponding tax rate and you pay the amount owed. PPE will be maintained in the coming years until they are terminated. Employers must therefore agree with HMRC on all benefits or expenses that are not included in the previous year. A PSA is a formal written agreement between the employer and the HMRC. The deadline to apply for an PPE expires on July 5, following the end of the fiscal year to which it relates. However, the EPI cannot apply retroactively to expenses or benefits that PAYE should have claimed.

Best practices are to agree on an PPE before the start of the fiscal year to ensure that all the elements you want to include can be included from the start. 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. 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. In-kind benefits that could be included in an EPI had to be included in all the following categories in order to be admitted: an EPI is a useful tool to facilitate the granting of benefits to employees without the employee having to bear the cost of tax. For example, employees are unlikely to be happy to find the cost of an employee function on their P11D! Before the partial decentralisation of income tax in Scotland in April 2016, there was no need for individual calculations or precise figures – suffice it to say, for example, that a $300,000 benefit had been granted and that about 20% of beneficiaries were taxpayers with a higher tax rate, the rest being the basic rate.