Income Tax (Earnings and Pensions) Act 2003 section 705

Approximations allowed in calculations

Section 705 permits the use of approximations when calculating the sums an employer must pay under a PAYE settlement agreement.

• Where multiple employees are covered by the agreement, calculations can be based on all of them taken together as a group rather than individually
• The sums payable may include income tax calculated on an estimated total of taxable benefits and expenses paid in connection with the relevant employments
• The resulting figures do not need to match precisely the income tax that would otherwise have been payable by the individual employees
• These provisions recognise that in practice PSA payments will rarely equal the exact combined tax liabilities of the employees concerned