Hi
I was a contractor and the Agency has charged me 12.5% Apprenticeship Levy. When I checked my remittance advice I can see my day rate, with deductions of PAYE, NIC and a further 12.5% (which I assume is Apprenticeship Levy).
Initially, the agency explained to me that because the contract is within IR35 I will need to pay more tax as I am considered PAYE and as a result they offered a rate slightly higher to compensate for the higher tax.
Later I discovered that the Apprentice Levy is not part of the PAYE so they should not have deducted this. By not objecting I guess I agreed to have the deductions only because I was led to think it was under the PAYE scheme.
Sometime after I contacted the agency again but this time they said the charge was because of VAT, however I am not VAT registered. The total deduction for the apprenticeship levy is approx 8k.
I mentioned this to my accountant and she thinks this is not normal.
Should a contractor be paying Apprenticeship Levy and does the agency have the right to apply this charge ?
Thanks
UPDATE: This was Agencies response in the first instance ( The contract doesn't mention Apprenticeship Levy anywhere but has a day rate of £376.25, though the remittance note has a day rate of $430):
“Firstly the pay rate of £430 per day needs to be reduced by 12.50% to cover the Er’s NIC & Apprenticeship Levy. This would take the contractors rate down to £376.25 per day.
Assuming that HMRC return his tax code as 1150 the gross rate of £376.25 translates into an approximate net rate of £250 per day."
When I Asked again agency spoke about charge being VAT related, neither I nor my accountant can make sense of it.
I was a contractor and the Agency has charged me 12.5% Apprenticeship Levy. When I checked my remittance advice I can see my day rate, with deductions of PAYE, NIC and a further 12.5% (which I assume is Apprenticeship Levy).
Initially, the agency explained to me that because the contract is within IR35 I will need to pay more tax as I am considered PAYE and as a result they offered a rate slightly higher to compensate for the higher tax.
Later I discovered that the Apprentice Levy is not part of the PAYE so they should not have deducted this. By not objecting I guess I agreed to have the deductions only because I was led to think it was under the PAYE scheme.
Sometime after I contacted the agency again but this time they said the charge was because of VAT, however I am not VAT registered. The total deduction for the apprenticeship levy is approx 8k.
I mentioned this to my accountant and she thinks this is not normal.
Should a contractor be paying Apprenticeship Levy and does the agency have the right to apply this charge ?
Thanks
UPDATE: This was Agencies response in the first instance ( The contract doesn't mention Apprenticeship Levy anywhere but has a day rate of £376.25, though the remittance note has a day rate of $430):
“Firstly the pay rate of £430 per day needs to be reduced by 12.50% to cover the Er’s NIC & Apprenticeship Levy. This would take the contractors rate down to £376.25 per day.
Assuming that HMRC return his tax code as 1150 the gross rate of £376.25 translates into an approximate net rate of £250 per day."
When I Asked again agency spoke about charge being VAT related, neither I nor my accountant can make sense of it.
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