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IR35 deemed calculation

IR35 deemed calculation

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Firstly, is the calculation up to 5 April or the company year end? Is there a deadline for reporting?
Secondly, once the calculation has been done how do you you report this deemed amount to HMRC?
Is there somewhere on the tax return for this?
Also are there any free online calculator tools about?
This is the first time I have done this and any help/advise will be greatly appreciated.

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By Accounting WEB
25th Apr 2009 09:55

IR35 client has has already processed final payroll
and submitted P35 with boxes 6 & 6a ticked but not including deemed calculation!
How should this be corrected? Can an amended P35 be sent?
Also should deemed calculation have been included on P14's & P60 which have also been submitted? How can these be corrected.
Thanks for all previous answers, much appreciated.

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By JCresswellTax
24th Apr 2009 13:41

Quite right Euan
Sorry I did forget to mention about employers NIC.

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By Anonymous
24th Apr 2009 12:45
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By Anonymous
24th Apr 2009 11:17

Just to clarify
hmm, I am in a similar position. Just to clarify it is better to pay out the deemed salary in March as an actual salary payment, and thus avoid a lot of headache! correct?

I found these calculators quite helpful,

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Euan's picture
By Euan MacLennan
24th Apr 2009 10:48

Just to add
I entirely agree with Joan, but it is crucial actually to pay the calculated salary in the tax year, so do include in the March payroll the balance over the amounts paid previously in the tax year. You do not want to end up paying over PAYE on a deemed, i.e: not actual, salary payment.

Joan mentioned that pension contributions are deducted before arriving at the salary, but the employer's NI contribution is also deducted before arriving at the gross salary. It tends to be a trial and error exercise to arrive at the exact gross salary which together with the associated er's NIC adds up to the figure you started with.

Although you do not need to enter anything in the personal service box on the tax return, provided that no dividend is drawn in addition to the IR35 salary, you will need to answer Yes (It is a service company) & Yes (Pay has been calculated in accordance with P35) to Question 6 on the company's P35.

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By JCresswellTax
24th Apr 2009 09:18

A lot of questions !
The calc should be prepared to 5th April.

We normally just rund the IR35 deemed payment as the March salary.

Deadline is really just the P35 deadline of 19th May as the details should be shown on that.

No need to include details on the tax return or under the service company box.

Not aware of any free calculators but it is a simple calc.

Income, less 5% allowance less expenses relating to the contract, pension contributions. Deduct the salary u have already paid and there is your deemed payment.

Hope this helps.

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