NIM18120 - Class 1B NICs: liability: record keeping

Once a PSA is agreed (by HMRC receiving the signed P626) the employer is no longer required to operate PAYE or pay Class 1/1A NICs on the benefits and expenses included in the PSA or include those benefits and expenses on forms P11D and P11D(b).

However an employer has to keep a suitable record of any items given to the individuals. These records will normally be the same as those which the employer keeps anyway for his own accounting purposes.

If employers cannot identify which employee received a particular expenses payment or benefit (for example, which employees made use of the company’s free chiropody service) the employer need only keep a record of

• the overall cost of providing the items in question
• the number of employees who received them, and
• an indication of what rate of tax they pay.

Records must be kept for a minimum of 3 years.