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    Default Under IR35 - Capita is charging me Apprenticeship Levy Tax

    I'm a contractor working for a goverment agency and Capita is handling my billing. I've been forced under IR35. Capita is now taking out of my day rate the apprentiship levy tax at .5%. This is only required by companies with a payroll over 3million. My company does not have a payroll of over 3m, So this must be Capitas Tax. Is this even legal to pass on a tax? they say it is a ccs policy that I pay for Capita's tax? I also don't get any of the benefits or rebates.

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    Quote Originally Posted by nelsonswork View Post
    I'm a contractor working for a goverment agency and Capita is handling my billing. I've been forced under IR35. Capita is now taking out of my day rate the apprentiship levy tax at .5%. This is only required by companies with a payroll over 3million. My company does not have a payroll of over 3m, So this must be Capitas Tax. Is this even legal to pass on a tax? they say it is a ccs policy that I pay for Capita's tax? I also don't get any of the benefits or rebates.
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    Capita, as your faux employer, has a turnover that means the levy is chargeable. Whether they pay it, you pay it, or the PSB pays it depends on your contract.

    BTW - your post implies you are putting the invoicing/receipts through your Ltd Co. How are you accounting for the VAT discrepancy between what you charge and what you receive? I asked my accountant and he didn't know!
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    First question who is paying you personally... To answer your question we need to know the contract hierarchy:-

    public sector client -> Capita -> ???? -> ???? (either your company / umbrella) --> you

    only then can we work out what is happening and whether the deduction is valid or not...
    merely at clientco for the entertainment

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    I live on CUK

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    Why is this thread in General?
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    Quote Originally Posted by ladymuck View Post
    Capita, as your faux employer, has a turnover that means the levy is chargeable. Whether they pay it, you pay it, or the PSB pays it depends on your contract.

    BTW - your post implies you are putting the invoicing/receipts through your Ltd Co. How are you accounting for the VAT discrepancy between what you charge and what you receive? I asked my accountant and he didn't know!
    There is no VAT discrepancy -> you bill £2000 with £400 VAT on top and you receive £400 in VAT.

    The issue is that you don't receive £2000 in payment alongside that £400 in VAT. You only get £1200 of it (rough guesstimate figure) with the rest withhold or paid on your behalf by the agency....
    merely at clientco for the entertainment

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    Quote Originally Posted by nelsonswork View Post
    Is this even legal to pass on a tax?
    It's legal as long as it is agreed between all parties - they cannot just add an extra charge to you without it being agreed in your contract though.

    One of the schools that I am involved with has had to add a line in the budget this year to account for it, even though "our" payroll bill is significantly less than the £3m turnover. One of the other schools that I am involved with does not because it is being paid for by another entity instead of the individual school. Both are legal because of the contractual arrangements.
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    Quote Originally Posted by SueEllen View Post
    Why is this thread in General?
    Due to the Chutney Spoon Levy.
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    Quote Originally Posted by eek View Post
    There is no VAT discrepancy -> you bill £2000 with £400 VAT on top and you receive £400 in VAT.

    The issue is that you don't receive £2000 in payment alongside that £400 in VAT. You only get £1200 of it (rough guesstimate figure) with the rest withhold or paid on your behalf by the agency....
    Ah...ok. That makes sense. Thank you

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    Quote Originally Posted by SueEllen View Post
    Why is this thread in General?
    Cause people are lazy.
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