PAYE Settlement agreements and voluntary NICs contributions

HMRC is consulting on:

• How PAYE settlement agreements work in practice. A PSA is a voluntary arrangement between an employer and HMRC that allows the employer to settle, on behalf of its employees, the income tax and NICs due on certain benefits and expenses. PSAs provide an alternative to reporting those items through payroll or on through the P11D benefit and expenses reporting process, with the employer paying the tax and Class 1B NICs instead of the employee being charged through payroll. This might cover, for example, shared transportation where it isn't easy to allocate the expense to one employee. 
• A consultation on how the voluntary National Insurance Contributions scheme is working in practice. Voluntary National Insurance contributions allow individuals who are not liable to pay National Insurance contributions (NICs), and who do not receive National Insurance credits, to maintain or build entitlement to contributory benefits including the State Pension. This might apply to very low earners, for example.

These consultations may be of interest to your payroll manager.

Respond by 15 September 2026