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Any Answers Answered: P11D and PSA season

19th Jun 2017
Editor AccountingWEB
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Business lunch

With the 6 July deadline looming for P11D filing and PSA arrangements, TAXtv hosts Giles Mooney and Tim Good got to grips with a couple of expedient questions from the AccountingWEB Any Answers board.

To watch the full video of Good and Mooney answering readers’ questions, click here or scroll down to the bottom of the page.

Include on PSA?

Supersonicsaint got in touch to enquire when business meals can be classed as staff entertaining on PSA.

“I'm trying to work out when business meals and drinks become employee entertaining and should be included on our PSA,” asked supersonicsaint, giving a number of examples.

Giles Mooney firstly credited the questioner as a generous employer, as they will also have to sort the national insurance on their employee’s behalf.

Tim Good reminded viewers that a PSA is a PAYE Settlement Agreement under which an employer can meet the tax and NI contribution costs of the benefits that would otherwise have had to go through the payroll or be on a P11D.

Good agreed with the answer given by AccountingWEB member Matrix, who said that the examples listed on the question would “all be staff entertaining” and as such go on the PSA if they are not going on P11Ds.

“If the staff costs were ancillary to entertaining clients then it would all be business entertaining,” continued Good, “but the examples listed were not ancillary and looked like staff entertaining, which will be taxable.”

P11D vouchers

An anonymous AccountingWEB user posted asking for a bit of P11D advice concerning vouchers:

“Company purchased some vouchers for employees as part of a benefit scheme. Employees got vouchers based on a percentage of their salary, but the company got a discount due to the bulk purchase.

“Do I put the value of the vouchers or the cost to the company?  The discount is small but I want to get it right.”

Citing the well-known case Pepper v Hart, Tim Good stated that the answer was the cost to the company.

Apart from those benefits where there’s a statutory method of calculating the benefit like company cars, accommodation or loans, the fundamental principle, cost to the company, applies.

To watch the full video, including discussion around the trivial benefit rule, click play in the box below.

For the latest episode of TAXtv visit PTP Interactive. TAXtv is a monthly tax update programme available as an annual subscription from £199, (11 issues plus special editions) to view online, download from the internet or watch on DVD.

Replies (2)

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Tony Granger
By TonyGranger
19th Jun 2017 17:00

Whilst the text or guide below says only the employer pays NIC1A - does this mean that the employee is not liable for any NI on the benefit, or just that he/she is not liable to NIC1A ?

Who has to pay Class 1A NICs?
SSCBA 92, S10(2)
Class 1A NICs are paid by employers only.

There is no employee contribution payable.

Legally, the person liable to pay Class 1A NICs is:

the person who is liable to pay employers’ Class 1 NICs on the last or only relevant payment of earnings in the tax year
if there is no employers’ Class 1 liability, the person who would have been liable to pay employers’ Class 1 NICs if the benefit itself had been earnings on which Class 1 NICs are due

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By newby
22nd Jun 2017 18:22

Can't the employee entertaining be processed under the trivial benefits rules?

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