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Simplifying PAYE settlement agreements - draft regulations

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HMRC is consulting until 21 February 2018 on amendments to the PAYE regulations, setting out a revised process for PAYE settlement agreements (PSAs) from April 2018, which will remove the current requirement for employers to renew PSAs annually, providing instead for an ‘enduring agreement’. HMRC consulted originally on these changes between August and October 2016.

The government has decided not to go ahead at this stage with plans to digitise the PSA process, although the regulations allow for digitisation in the future. In the policy paper which accompanies the draft regulations, HMRC indicates that digitisation of PSAs will only be undertaken where this would be ‘supportive of business’.

The draft regulations set out the form of the revised PSA, which will continue to have effect for each subsequent tax year until varied or cancelled, either by the employer, or HMRC. The regulations will also allow applications to be processed electronically, should digitised processes become available in the future. There is no intention to amend the benefits-in-kind or expenses which can be covered by a PSA.

HMRC intends to publish new guidance in the PAYE manual in due course.