Inside IR35 invoicing & PAYE help

[liss]

Hi peeps,

Completely new to the contracting thing and am looking for some pointers. I'm on an inside IR35 contract, through a Limited Company.

1) What should the monthly invoice that I give to the company I'm contracted to typically look like? I have nothing that qualifies under expenses (as yet), so is it simply a one liner with my stated Days x Day rate?

e.g. 21 days @ Day rate (£xxx) = £yyyyy

2) HR in the company I'm contracted to has instructed me to complete an HMRC 'Starter Checklist for PAYE', which asks for things such as NI number. Is this correct? I presumed that their role is to pay directly to the Limited Company, i.e. they shouldn't need my personal details.

Thanks!

[cojak]

They need proof that you are paying employer's and Employee's NI. So if HR instructs you to do this, you do indeed need to complete the PAYE starter checklist.

As for the invoice, you charge them the day rate, but I must admit I have no idea if there is VAT involved (although you're below this limit at the moment, so that isn't an immediate worry).

Basically they will need proof that you have paid the 48% of tax expected to be paid for an inside contract.

[ladymuck]

On an Inside contract, the fee payer will be deducting PAYE and NI from your invoice payment so you will need to be sure you're making the right accounting treatment to record it as a deemed payment and not subject to further taxes when you withdraw the funds from your company.

Do check the fee payer isn't deducting Employer's NI and Apprentice Levy too...

[eek]

They need proof that you are paying employer's and Employee's NI. So if HR instructs you to do this, you do indeed need to complete the PAYE starter checklist.

As for the invoice, you charge them the day rate, but I must admit I have no idea if there is VAT involved (although you're below this limit at the moment, so that isn't an immediate worry).

Basically they will need proof that you have paid the 48% of tax expected to be paid for an inside contract.

Not any more - PSC companies aren’t trusted so if you are using a limited company you will be receiving deemed payments - the agency / company should be paying the employer NI (and apprenticeship levy if appropriate) and also paying the employee NI and income tax on your behalf

Apart from VAT anything received can be transferred to your bank account as all tax will have been paid.

my concern would be that I’m not aware of many companies actually doing deemed payments most are just saying agency payroll or use an umbrella company

as for the question regarding being asked for your NI number - that is required for agency reporting regulations and to confirm you have the right to work in the UK - I suspect they will want to see your passport or other documentation

[cojak]

Not any more - PSC companies aren’t trusted so if you are using a limited company you will be receiving deemed payments - the agency / company should be paying the employer NI (and apprenticeship levy if appropriate) and also paying the employee NI and income tax on your behalf

Apart from VAT anything received can be transferred to your bank account as all tax will have been paid.

my concern would be that I’m not aware of many companies actually doing deemed payments most are just saying agency payroll or use an umbrella company

as for the question regarding being asked for your NI number - that is required for agency reporting regulations and to confirm you have the right to work in the UK - I suspect they will want to see your passport or other documentation

Right... thanks for that.

There must be one or two PSCs working like that, but very few. It's good that we have at least one that others can refer to.