PAYE Settlement Agreements — missed the 19 October payment deadline? Here's what to do

 

If you run a limited company and offer staff benefits or reimburse expenses, there's a good chance a PAYE Settlement Agreement (PSA) is doing some quiet heavy lifting in your payroll process. And if the 19 October postal deadline just slipped past you, you're not out of options yet — but you do need to move quickly.

 

What a PSA actually covers

 

A PSA lets you make one annual payment covering all the tax and Class 1B National Insurance due on minor, irregular or impracticable employee expenses or benefits. That means you don't have to put those items through payroll, report them on end-of-year P11D forms, or pay Class 1A National Insurance on them.

 

HMRC's own examples of what qualifies include long-service and incentive awards, telephone bills, small gifts and vouchers, staff entertainment such as tickets to events, relocation expenses over £8,000 (the first £8,000 is tax-free), the cost of attending overseas conferences, expenses for a spouse accompanying an employee abroad, use of a company holiday flat, shared cars and personal care expenses. What you cannot put through a PSA includes wages, company cars, cash bonuses, round-sum allowances and beneficial loans.

 

Two dates that matter

 

The PSA application deadline is 5 July following the first tax year the agreement applies to — so for the 2025-26 tax year that was 5 July 2026. The payment deadline is 22 October following the tax year the PSA applies to, or 19 October if you pay by post.

 

So where does that leave you right now? The postal deadline of 19 October has just passed. But if you pay electronically, you still have until 22 October. The fastest electronic options arrive the same or next day: Faster Payments or CHAPS through online banking, approving a payment through your online bank account, or a debit or corporate credit card payment online. A one-off Direct Debit is also available, while Bacs takes three working days — so leave enough room if you go that way.

 

What happens if you miss the payment deadline

 

GOV.UK is clear: you may be fined or charged interest if you do not pay or your payment is late. The practical move is to pay as soon as you can through the fastest electronic route, then check that the payment has been received and allocated to the right account. Note too that how much you owe depends on the value of the expenses or benefits you report to HMRC — if you haven't reported them, HMRC may calculate the amount themselves and you could be charged more.

 

One more thing for next year

 

Because a PSA needs to be applied for by 5 July following the first tax year it covers, diary that date early. And if you apply after the start of the tax year, some items may have to go on P11Ds separately, so the earlier you apply, the cleaner the coverage.

 

If the 19 October post deadline went by without your payment going out, the clock hasn't stopped — but 22 October is the last call. Pay electronically today, and put next July's application deadline in the diary now.