How Does Your Business Prepare for PSA Reporting?
If you’re not sure what a PSA is, it stands for PAYE Settlement Agreement. It’s a voluntary agreement with HMRC that allows businesses to settle certain types of tax liabilities on behalf of their employees.
PSAs benefit everyone. They keep employees happy because they won’t be faced with unexpected tax charges on benefit in kind. And they keep employers happy because they save time by settling the tax and national insurance contributions (NIC) on certain benefits more efficiently than completing P11D forms. As a further incentive, the tax and NICs can be set against taxable profits.
What types of benefits does a PSA cover?
- Minor benefits: Such as incentive awards, staff entertainment or non-business expenses. For example, if you travel overnight on business and exceed the daily expense limit.
- Irregular benefits: Benefits that aren’t paid regularly such as; relocation expenses, the cost of attending overseas conferences or expenses of a spouse accompanying an employee overseas.
- Impracticable expenses and benefits: Things that are difficult to place a value on or divide equally between employees, such as staff entertainment that isn’t exempt from tax or national insurance, shared cars or personal care expenses.
So, what’s the problem? This is a more efficient process, right?
While businesses are warming to PSAs, there is still a significant management overhead in collecting, analysing and reporting on the required data. For example, categorising the multitude of spend types and working through the subtle nuances of what should and shouldn’t be included can be an arduous process at the best of times. For companies whose processes are manual and/or paper-based, it’s practically impossible.
In a recent project, one customer told me that their UK PSA reporting processes requires the fulltime focus of six financial analysts, who are led by the company’s Employee Taxation Accountant for two full weeks - a huge drain on resources!
Is there a better way?
Business that use SAP Concur, can accurately capture and categorise expense data when claims are made. This data is then automatically collated into PSA reports, making the process very light touch and highly efficient.
The 2018 deadline for PSAs is October. So, will you be spending weeks trawling through data or will you simply rely on SAP Concur to do the hard work for you?
To discuss a simpler way to manage PSA reports, contact a SAP Concur specialist today.
