HMRC has updated its guidance on paying a worker who provides their services through an intermediary and is subject to the off-payroll working rules.
The update to the guidance adds an explanation on how to calculate the deemed direct payment, which is the amount paid to the worker that should be treated as earnings for the purposes of the off-payroll rules.
To calculate the deemed direct payment the fee-payer must:
The resulting amount is the deemed direct payment. If it is nil or negative there is no deemed direct payment.
The fee-payer then needs to deduct tax and NIC, as appropriate, from the deemed direct payment, and also pay employer Class 1 NIC due in respect of these engagements.
The pay and deductions need to be reported to HMRC under RTI using a full payment submission (FPS), like for normal workers who are on payroll.
However, unlike a real worker, the following payroll fields do not apply to a worker who is engaged through their own company, namely