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how to calculate deemed payment/IR 35?

I understand the ruling but has the calculation of deemed payment changed?

Didn't find your answer?

A client of mine has been deemed to fall under the new IR35 ruling.

How does the engager calculates his "gross" when running the payroll from the invoices?

It just that the engager wants to deduct the ER NIC from the invoice total and I don't think it is right.


Replies (5)

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By lionofludesch
13th Apr 2021 15:36

What I would do is pass it to someone who deals with IR35 on a regular basis.

I don't need the headaches.

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By SXGuy
13th Apr 2021 15:45

The fee payer is responsible for Employer NIC payments.

And infact i believe there is either an on going or settle litigation against companies who deduct employer NI from the contractors pay.

Article found here

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Replying to SXGuy:
By crebourret
13th Apr 2021 16:02

I thought as much. I just remember this when i first look into it last year.
I just could not find the information again.

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By Paul Crowley
13th Apr 2021 15:44

Up to contractor and 'employee' to agree their rates
Is contractor paying ERNIC?

Is it any different to the position if 'employee' had operated PAYE inside his company

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By Hugo Fair
13th Apr 2021 17:06

HMRC’s Off-payroll Working guidance mentions that contractor day rates can be negotiated up or down to accommodate the added cost of employers’ NI.

BUT, it is absolutely clear that the 'engager' is responsible for operating PAYE on the 'fee' being claimed (as the deemed employer) - and by definition this includes paying ER NICs.
It is NOT lawful for ER NICs to be deducted from a fee/rate that has already been agreed. If, for instance, an umbrella or employment agency deducts 13.8% from the gross pay, then that would be classified as an unlawful deduction.

How the contractor then extracts money from her/his company, and how they can offset PAYE deductions already suffered, are of course entirely different matters.

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