When putting his sales figure in his ltd company accounts will this be the net figure he has received with tax and Ni deducted ?
Or will it include tax and Ni?
Thanks
Replies (13)
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I would re-read the bit here you wrote:
"his employers will deduct the ni and tax from the payment he gets"
Assuming this is correct you have answered your own question about your presumably soon to be ex-client.
This may help. https://www.accountingweb.co.uk/any-answers/off-payroll-worked-example
I assume you prepared the previous accounts as outside IR35?
Either use the net income as turnover or the gross and net it off with the tax and ni deducted.
I dunno why you keep going on about running payroll, what do you think the contractor has done?
And why would you include the contractors employers NI in your deductions, it isn't your clients is it?
I presume your client is providing services to a large or medium-sized organisation. From April 2020 the responsibility for determining whether such contracts fall within IR35 shifts to that organisation and if within IR35, the fe-payer must deduct PAYE & NIC and pay employer's NIC. This brings these organisations in line with the public sector and you will find some helpful guidance (and other links) explaining the processes involved at https://www.gov.uk/guidance/off-payroll-working-in-the-public-sector-per...
Hi Jcace
I can see that the fee payer will deduct the tax and national insurance and employers NIC from April 2020.
my client`s Ltd company will get the net amount.
According to your link when my clients Ltd company gets paid it will have already had the tax and Ni and Employers NIc deducted from April 2020 so then I would run a payroll through the Ltd company for the Net amount and not deduct tax or national insurance or employees Nic as its already deducted. .
I wonder what will happen if the fee payer has deducted the wrong amount of tax?
Would the p60 from the fee payer be in the clients name so he could put it on his tax return and claim a tax repayment? even though it was paid to the Ltd company.
Thanks
The fee payer will be treated as though they are the employer of your (individual worker) client. They will be responsible for deducting PAYE & NIC in the same way that any other employer is.
They will also issue a P60 (or P45) in the name of the individual.
The intermediary company can run the net amounts through their own payroll as non-taxable, non-NICable payments and report using an FPS.
There will be some accounting adjustments required in order to account for the tax and NI deducted and to avoid the company paying tax thereon.