Class1A + PSA

[r040034180]

with a PSA in place, is the calculation of class1a based on [ function/activity cost + paye+ees ni calculation ] at 12.8% or some other basis

i gather that the class1a need to be remitted in july whilst the psa monies are oct ?

thanks in advance

[Elenderil]

Lets take this in stages.

First Class 1A NIC is only due on items returned on form P11D where class 1 NIC is not due (Unless the item is exempt both Class 1 and Class 1A - such as some expenses).

Class 1A NIC is calculated on the assessable value used in calculating the employee's tax liability using a rate of 12.8%. This is payable by the employer in July and the amount due is returned on form P11D(b).

Items included within PAYE Settlement Agreements (PSAs) by agreement between the employer and HMRC do not appear on forms P11D so no Class 1A NIC is due. Instead Class 1B NIC is levied. This is paid over with the the PSA tax on or before the 6th of October following the end of the tax year.

Like Class 1A NIC, Class 1B is charged at 12.8%. The NIc is charged both on the value of the benefit or expense used in calculating the tax, and also on the value of the grossed up tax due. There is an example of how this calculation works in HMRC's guidance leaflet on PSAs.

Hope this helps demystify things.