UK: PAYE Settlement agreements & Employment Related Security returns – End of Tax Year Reporting Compliance 2024/2025

published on 14 April 2025 | reading time approx. 2 minutes

The 2024/2025 UK tax year officially ended on 5 April 2025, and employers must now turn their attention to post-year-end PAYE reporting obligations. While forms like P11Ds and P60s are familiar territory, additional reporting may be required for businesses providing certain benefits or issuing shares to employees.

Hände auf dem Tisch, Berechnung mit dem Taschenrechner

Rödl & Partner's UK Personal Tax Team has outlined the key compliance requirements that businesses must consider.

PAYE Settlement Agreement (PSA)

A PSA allows employers to settle tax and National Insurance Contributions (NICs) on minor, irregular, or impractical benefits provided to employees, avoiding the need to pass these tax charges onto staff.

What Can Be Included in a PSA?

A PSA can cover benefits that fall into the following categories:

Irregular: Non-routine expenses or benefits provided on an ad-hoc basis.
Minor: Low-value benefits that are not significant enough to be included in PAYE.
Impractical to Allocate: Expenses that are difficult to assign to individual employees.

Examples of items typically included in a PSA:

Personal incidental expenses
Qualifying relocation costs exceeding £8,000
Non-allowable relocation costs
Prizes, incentives, and awards
Benefits provided post-termination
Staff entertainment
Cost of assets transferred to employees
Non-allowable subscriptions
Non-allowable Christmas or annual functions

Benefits of a PSA

Employees receive these benefits tax-free.
Employers do not need to report them via monthly PAYE returns.
No need to include these benefits on individual P11Ds.
Only one annual payment is required to settle all tax and NIC liabilities.

Key Deadlines

5 July 2025 – Deadline to apply for a PSA for the 2024/2025 tax year.
22 October 2025 – Deadline for electronic payment of PSA tax and NIC (or 19 October 2025 if paying by cheque).

Employment Related Securities (ERS) Return

Employment-related securities (ERS) include shares and similar financial instruments awarded to employees and directors. Companies use ERS schemes to incentivize and retain key personnel.

Registration Requirements

Employers must register any new tax-advantaged share schemes with HMRC by 6 July 2025, including:
Share Incentive Plans (SIPs)
Savings-Related Share Option Scheme (SAYE)
Company Share Option Plans (CSOP)
Enterprise Management Incentives (EMI)

For unapproved schemes, employers must register with HMRC only when a reportable event first occurs, and this must be done by 6 July following the end of the tax year.

ERS Reporting Requirements

Once registered, an ERS return must be filed annually, even if no reportable events occurred during the year (a nil return is required to avoid penalties).

Reportable ERS events include:

Acquisition of securities or options over securities
Chargeable events related to restricted or convertible securities
Discharge of notional loans relating to securities
Disposal of securities for more than market value
Assignment, release, or receipt of benefits related to options

Key Deadlines

6 July 2025 – Deadline to file ERS return for the 2024/2025 tax year.
Late or missing ERS returns will result in automatic penalties from HMRC.

How Rödl & Partner Can Help

Navigating end-of-year tax compliance can be complex, but our experts can support you in ensuring full compliance with PAYE, PSA, and ERS reporting obligations.

For tailored advice, please contact our contact person Sufyain Bader.