Calculating Paye Settlement Agreements

With regard to the partial decentralisation of income tax in Scotland, Scotland now has powers over Scottish income tax rates and ranges under the Employment Act 1998, amended by the Scotland Act 2016. The Wales Act 2014 provides powers over Welsh income tax rates. Income tax in Scotland and Wales is levied on income defined as “non-savings, non-dividend-related” income; Overall, this includes employment income, earnings from self-employment, retirement income and income from property received by persons classified as Scottish or Welsh tax payers in a tax year. In Wales, the Welsh income tax rate applies from 2019/20, but has not been changed by that of the rest of the UK. However, Hmrc stated in its October 2019 employers` report card that a separate calculation for Welsh taxpayers should be made in the same way that employers already have to do for Scottish taxpayers. It is in the interests of both Scotland and Wales to ensure that income tax revenues are maximized to fund public services in these jurisdictions. In this context, it is important that PPE calculations be made as accurately as possible based on the status of staff. From April 2016, employers should have calculated the PSA share for Scottish taxpayers using Scottish income tax rates (and from April 2017). If the employer has workers who are tax residents in Scotland and workers residing in the rest of the UK, two separate PPE calculations should be established, one for Scottish taxpayers and the other for taxpayers in the rest of the UK (RUK). If you do not have an PPE in place and miss the deadline to apply for an EPI, but still want to pay taxes in this way, you may be able to make an optional disclosure and billing with HMRC. However, you should be aware that, in certain circumstances, you must pay a fine. Before the partial decentralisation of income tax in Scotland in April 2016, there was no need for individual calculations or precise figures – suffice it to say, for example, that a $300,000 benefit had been granted and that about 20% of beneficiaries were taxpayers with a higher tax rate, the rest being the basic rate. This was a relatively simple way for employers to pay on what was due and proved to be a success in obtaining income.

If an employer is sure that it does not have employees who are Scottish or Welsh taxpayers (see below), this is maintained. The value of the services provided should be taxed under the EPI at the marginal tax rates of each worker concerned. It is therefore important that tax rates for workers residing in each of the UK countries are also taken into account, as deceded governments (currently Scotland and Wales) are able to set the tax rates payable by taxpayers based in those countries. The instruction of the employers` bulletin is to identify workers on the basis of their tax code; In other words, Scottish taxpayers are characterized by an S prefix and Welsh by a prefix C (Cymru). This means that employers must monitor the provision of all in-kind benefits provided for the inclusion of PPE by the court at the beginning of each tax year and identify all workers in that jurisdiction according to tax brackets.

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