Tax and National Insurance due under a PAYE Settlement Agreement (PSA) for 2017/18 must reach HMRC by 22 October 2018 where payment is made electronically. An earlier deadline of 19 October 2018 applies where payment is made by cheque.

From 2018/19, form PSA1 – the form that employers complete to submit PSAs – will be changing. This is to reflect the differing income tax rates and thresholds applying to Scottish taxpayers. When completing form PSA1, employers will need to notify HMRC whether the benefit or expense is being provided for a ‘rest of the UK’ (rUK) or a Scottish taxpayer.

Under a PSA, the employer pays tax on the employee’s behalf on the grossed up value of the benefit. Where the employee is a Scottish taxpayer, the appropriate Scottish rate of income tax should be used. Details of the Scottish rates and thresholds applying for 2018/19 can be found on p. 12 of the July issue of Small Business Tax & Finance.