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Probabilistic Seismic Hazard Analysis (PSHA) typically requires tectonic b-values and seismic activity rates using declustered catalogues to compute the annual probability of exceedance of a given ground motion (for example, the Peak Ground Acceleration or PGA). In this work, we propose a methodology that includes the spatially-gridded time-dependent b-value and activity rate computation using seismic clusters in PSHA calculations. To account for the the spatial variability and the relationship of the earthquakes with the seismic sources, we incorporate the distance from the grid cell to the closest fault and the epicentre's uncertainty into the smoothing kernel as the average distance and the variance, respectively. To illustrate this methodology, we selected two scenarios, one in central Italy where L'Aquila earthquake happened and one in south-eastern Spain, where several earthquakes with a moment magnitude (Mw) greater than 4.0 have taken place over the last 30 years, including two earthquakes with greater than or equal to 5.0 Mw. We compared three different seismic activity models based on the parameters considered in the calculations (distance from spatial cells to faults and epicentral distance uncertainty) and we defined and calculated the changes of the annual probability of exceedance for a given background PGA value. The results reveal an oscillation of the changes of the annual probability of exceedance in the proximity of the occurrence of significant events. The increase is more significant in high seismicity areas, such as Italy, but it is no so evident in moderate seismicity regions as Spain. However, we have observed how, for moderate to low seismicity regions, the use of a non-declustered catalogue can be appropriate when computing time-dependent PSHA, as in the case of Spain. [ABSTRACT FROM AUTHOR]