PSA1170 - Overview of PAYE Settlement Agreements: Example Calculation
The PSA calculator on SEES will calculate the tax and Class 1B NICs due under a PSA. There are separate calculators for each tax year. You just enter the type of the benefit or expense paid in the first column and the value of the amounts applicable to basic rate, higher rate, or the additional rate and the calculator does the rest.
The following example shows how to calculate the tax and Class 1B NICs payable under a PSA for 2014-15:
An employer provides benefits valued at 拢50 to 1200 of their employees which would ordinarily attract a Class 1A NICs liability. A PSA is agreed on the basis that the payments are minor.
The employer states that:
- 800 employees pay tax at the basic rate
- 200 employees pay tax at the higher rate, and
- 200 employees pay tax at the additional rate
Tax Calculation
Value of benefits provided to basic rate employees (800 x 拢50) = 拢40000.00
Tax due @ 20% on total value of benefits of 拢40000 = 拢8000.00
Grossed up tax 拢8000 x 100/(100-20) = 拢10000.00
Value of benefits provided to higher rate employees (200 x 拢50) = 拢10000.00
Tax due @ 40% on total value of benefits of 拢10000 = 拢4000.00
Grossed up tax 拢4000 x 100/(100鈥�40) = 拢6666.67
Value of benefits provided to additional rate employees (200 x 拢50) = 拢10000.00
Tax due @ 45% on total value of benefits of 拢10000 = 拢4500.00
Grossed up tax 拢4500 x 100/(100鈥�45) = 拢8181.82
Tax Payable (Taken from grossed up tax amounts) = 拢10000.00 + 拢6666.67 + 拢8181.82 = 拢24848.49
Class 1B NICs Calculation
Value of items attracting Class 1A NICs 拢50 x 1200 employees = 拢60000.00
Add grossed up tax payable 拢24848.49. Total liable to Class 1B NICs = 拢84848.49
Class 1B NICs payable 拢84848.49 @ 13.8% = 拢11709.09
Total payable in the PSA; Tax 拢24848.49+ Class 1B NICs 拢11709.09 = 拢 36557.58
200 employees pay tax at the additional rate.