I have seen a few comments now that it will be unlawful post April 2020 to have deductions made for Employers NI from your agreed rate. Is this true?
To quote Dave Chaplin:
"My thoughts are that the Chapter 8 rules for IR35 do not mean employers have to pay employers NI, unlike the new chapter 10 rules, which means they do."
Network Rail ‘factsheet’ indicates unlawful conduct
Under a subhead titled ‘How will IR35 affect the offer?’, the factsheet informs contractors: ‘If a role is deemed to be inside of IR35, the fee-payer will calculate Income Tax and primary (employee) National Insurance Contributions (NICs) and pay them over to HMRC. These amounts will be deducted from the agreed fee for the work provided. Network Rail have also taken the decision to deduct employer’s NICs from the agreed rate.’
This is contrary to the Off-Payroll legislation – ITEPA, Part 2, Chapter 10 - which requires that employer’s NI and the Apprenticeship Levy be paid on top of the agreed rate by the fee-payer.
Section 7 of HMRC’s guidance on applying the Off-Payroll rules offers further clarity on the matter, stating: ‘They [the fee-payer] cannot lawfully deduct the secondary NICs from a fee that has been agreed, but could, depending on the contractual terms, negotiate a lower fee.’
This fits how I was paid as a student doing temp agency worker jobs, I got the agreed rate minus employee taxes.
edit: Guidance note with statement made.
Off-payroll working in the public sector: reform of the intermediaries legislation - information for agents - GOV.UK
To quote Dave Chaplin:
"My thoughts are that the Chapter 8 rules for IR35 do not mean employers have to pay employers NI, unlike the new chapter 10 rules, which means they do."
Network Rail ‘factsheet’ indicates unlawful conduct
Under a subhead titled ‘How will IR35 affect the offer?’, the factsheet informs contractors: ‘If a role is deemed to be inside of IR35, the fee-payer will calculate Income Tax and primary (employee) National Insurance Contributions (NICs) and pay them over to HMRC. These amounts will be deducted from the agreed fee for the work provided. Network Rail have also taken the decision to deduct employer’s NICs from the agreed rate.’
This is contrary to the Off-Payroll legislation – ITEPA, Part 2, Chapter 10 - which requires that employer’s NI and the Apprenticeship Levy be paid on top of the agreed rate by the fee-payer.
Section 7 of HMRC’s guidance on applying the Off-Payroll rules offers further clarity on the matter, stating: ‘They [the fee-payer] cannot lawfully deduct the secondary NICs from a fee that has been agreed, but could, depending on the contractual terms, negotiate a lower fee.’
This fits how I was paid as a student doing temp agency worker jobs, I got the agreed rate minus employee taxes.
edit: Guidance note with statement made.
Off-payroll working in the public sector: reform of the intermediaries legislation - information for agents - GOV.UK
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