Under IR35 - Capita is charging me Apprenticeship Levy Tax

[eek]

Moved.

But to the wrong forum - this is an Accountancy / Public Sector IR35 question not a business one....

[l35kee]

Structure is: Public Sector Client -> Capita -> My LTD Company -> Me

So Capita is handling the billing on behalf of the client?

I think it's important to clarify that this is different to being contracted to Capita to deliver a project that happens to be for a public sector client... Right, right?!?!

Right?

[Hobosapien]

Capita is behaving as agency and payroll service provider in this instance, so all looks above board to me as per Eek's explanation of what is going on.

Myself, I've confirmed that the rate I was offered by the client when tempting me back to PS is exactly the same as what the payroll service of the chain (yet to be sorted out) will receive from the agency, that Capita said I would need (not willing to be agent themselves for some reason).

So any fees that Capita and the agency are charging to be in the chain will be handled by the client and any fees the payroll service will charge/deduct (including tax and levy) will come out of the rate I am expecting. Hence the client agreeing a rate increase of 30%+ to cover me being inside IR35 when previously I was outside.

[nelsonswork]

Capita are therefore deducting the appropriate payments as the levy is based on employers NI payments and Capita is responsible for paying the employers NI part of your IR35 payments. See https://www.gov.uk/guidance/pay-apprenticeship-levy for the rules on how the apprenticeship levy is paid

And to avoid any avoidance lets show how an IR35 contract is now paid:-

Employers NI deducted from the invoice and paid by the agency directly
Employees NI paid on your behalf by the agency
Income Tax paid on your behalf by the agency

Thanks, my companys payroll is not more then 3 million and thus I should not pay the Apprenticeship Levy how ever Capita is debucting it before the payment to my company alongside Employers NI.

[TheFaQQer]

Thanks, my companys payroll is not more then 3 million and thus I should not pay the Apprenticeship Levy how ever Capita is debucting it before the payment to my company alongside Employers NI.

If you have an agreement for Capita to deduct additional fees that they incur, then you have to pay it. If your contract allows for taxes and NI to be deducted, then you have to pay it. If your contract does not allow for Capita to deduct additional fees or taxes, then they need to agree that in your contract.

Just because Capita have to pay it does not give them the automatic right to pass that cost onto you.

[eek]

Thanks, my companys payroll is not more then 3 million and thus I should not pay the Apprenticeship Levy how ever Capita is debucting it before the payment to my company alongside Employers NI.

The public sector IR35 means that its not your company's responsibility to pay Employers NI but Capita (or whatever agency is the last party in the chain before your limited company) - and Capita definitely have a payroll over £3m.... To avoid paying the levy you need to use either an umbrella company or be working via an agency with a payroll of less than £3m...

TF also states that Capita may not have the right to deduct fees from your contract - I strongly suspect that isn't the case as you are not complaining about Employer NI deductions, just the Apprenticeship levy - but its worth checking.

[DaveB]

The public sector IR35 means that its not your company's responsibility to pay Employers NI but Capita (or whatever agency is the last party in the chain before your limited company) - and Capita definitely have a payroll over £3m.... To avoid paying the levy you need to use either an umbrella company or be working via an agency with a payroll of less than £3m...

TF also states that Capita may not have the right to deduct fees from your contract - I strongly suspect that isn't the case as you are not complaining about Employer NI deductions, just the Apprenticeship levy - but its worth checking.

Going brolly doesn't get you out of the levy. Lucy has confirmed elsewhere that Brolly's will be charging the levy to their contractors as well. If you are working through a Brolly via Capita then the brolly will deduct the levy instead of capita as the last payer in the chain.

[eek]

Going brolly doesn't get you out of the levy. Lucy has confirmed elsewhere that Brolly's will be charging the levy to their contractors as well. If you are working through a Brolly via Capita then the brolly will deduct the levy instead of capita as the last payer in the chain.

I badly phrased it - it needs to be an umbrella with a payroll of less than £3m (unlikely to exist but you never know - its perfectly possible to run multiple companies with each keeping payroll less than £2.9m)..

[nelsonswork]

Thanks for the feedback. It looks like I'm stuck paying this. I did negeoate more mony for this contract. It does not come anywhere close to the extra amount of taxes for IR35. I will pay 36%-40% tax now on all my income. I also still have compture equipment, software, hosting, insurance and accountant to pay. I now pay more tax then a avarge employee by at least 14%. Dosn't pay to contract with the goverment.

[TheFaQQer]

Thanks for the feedback. It looks like I'm stuck paying this. I did negeoate more mony for this contract. It does not come anywhere close to the extra amount of taxes for IR35. I will pay 36%-40% tax now on all my income. I also still have compture equipment, software, hosting, insurance and accountant to pay. I now pay more tax then a avarge employee by at least 14%. Dosn't pay to contract with the goverment.

Time to look for new work that isn't IR35 caught.