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Off payroll worker Public Sector

Off payroll worker Public Sector

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I have my first off payroll public sector worker client. This is an existing client who has worked on non IR35 contracts until the end of Jan 19, then went on Maternity leave and started this new contract from the second week in January 20. They have been working via an agency in the public sector and they are paid weekly.

No payroll has gone through the PSC after the end of the maternity pay in Sept 19 due to lack of funds in the company.

I believe that the off payroll working income needs to be reported via RTI as a non taxable deemed payment. We use Moneysoft and this has been set up for monthly payroll. 

1) Is it correct that the deemed payment must be reported weekly or is an annual submission all that is required?

2) How are others accounting for this in the PSC:

Basic Daily              2,800.76  
VAT                            560.16   
Gross Invoice         3,360.92  
BR Tax                     - 560.20  
Ees NI                     -  208.57  

Received                       2,592.15

My client assures me that this is very short term and the she will return to non IR35 contracting within i've seen what a hassle this system is I will be avoiding all other cases!

Thanks in advance

Replies (3)

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By lionofludesch
27th Feb 2020 16:20

" i've seen what a hassle this system is I will be avoiding all other cases!"

Why wait for the next one ?

Avoid this one too.

Thanks (1)
By RedFive
27th Feb 2020 16:41

I've had similar and was going to run a mile but actually it is quite straightforward once you get your head around it.

See here where I list out the bookkeeping entries

Set up an 'addition' tab in moneysoft and untick the tax / ni & pension boxes. Put the deemed payment in and report it that way. Annual submission is fine.

Here is an example of what I am doing with the bookkeeping

Deemed payment £500 after Income tax and NI hits company bank account

CR IR35 Sales DR Bank £500


DR Deemed payment expense CR DLA £500

Income £500
IR35 Deemed payment £500
Accountancy fees £50
Profit (Loss) (£50)

Balance Sheet
Cash in Bank £450
DLA £500
Capital and Reserves (£50)

End client supplies a P60 at year end which you disclose in personal tax return at which point client may get a tax refund depending on other income. Deemed payment reported via payroll needs to match the net payment on P60.

No double taxation.

We are charging less than umbrella companies for this so client still has flexibility to contract hop and dosen't suffer employers NI that umbrellas invariably pass on.

Hopefully menas there is still a market for inside IR35 contractors, it's not as bad as some have made out (as I have in the past).

Thanks (1)
Replying to RedFive:
By CWservices6064
27th Feb 2020 17:31

Thanks for such a comprehensive response, much appreciated!

Good point re ERS NI and umbrellas and good to know that annual RTI reporting is all that's required.

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