Inside IR35 rules

[CoolCat]

So one of the big arms length public sector organisations is putting forward the following...

they will only contract inside IR35

and they want to deduct employers national insurance themselves

and pass on the rate minus the employers national insurance to the umbrella

for the umbrella to put through payroll and employees national insurance gets taken off via PAYE in the normal way

is this legit?

should the umbrella be the one paying the employers national insurance?

thanks

[malvolio]

So one of the big arms length public sector organisations is putting forward the following...

they will only contract inside IR35

and they want to deduct employers national insurance themselves

and pass on the rate minus the employers national insurance to the umbrella

for the umbrella to put through payroll and employees national insurance gets taken off via PAYE in the normal way

is this legit?

should the umbrella be the one paying the employers national insurance?

thanks

That's the way it's always worked. As long as you aren't paying ErNICs, what's the problem?

[BrilloPad]

That's the way it's always worked. As long as you aren't paying ErNICs, what's the problem?

I think the concern is paying them twice? Or am I missing something?

[CoolCat]

I think the concern is paying them twice? Or am I missing something?

Correct

Dont want to be charged employers national insurance twice

[TheFaQQer]

The client aren't the employer, so they shouldn't be taking the employers NI off at all. They should pass the gross to the umbrella, who deduct NI and PAYE and pay you net as an employee.

[CoolCat]

The client aren't the employer, so they shouldn't be taking the employers NI off at all. They should pass the gross to the umbrella, who deduct NI and PAYE and pay you net as an employee.

thats what I think

however where is this tax rule written down when faced with a big public sector hiring organisation saying otherwise?

Indeed if the rate went through my own limited company, surely that company would be required to pay the employers national insurance (if the contract is inside IR35) so I dont see how the hiring organisation can withhold it

[VelcroPower]

That doesn't make any sense.

If the agency deduct the employer NIC the Umbrella will still have to calculate it and pay it even if they don't deduct that from you, so unless there is a commercial arrangement where the umbrella gets paid the Employer's NIC separately then it sounds a bit nuts. The chances of the Agency calculating the right NICs and it agreeing with the Umbrella's calc would be about 0.3% I would guess.

There is no obligation for anyone in the chain to actually pay you the Employer NIC per se - it's all just an agreed rate from which NIC, Margins, Pensions etc can be deducted from by the Umbrella.

So I would definitely ask more about how it will work and get a full illustration of an example weekly / monthly payment to see how the umbrella will break it down.

[CoolCat]

That doesn't make any sense.

If the agency deduct the employer NIC the Umbrella will still have to calculate it and pay it even if they don't deduct that from you, so unless there is a commercial arrangement where the umbrella gets paid the Employer's NIC separately then it sounds a bit nuts. The chances of the Agency calculating the right NICs and it agreeing with the Umbrella's calc would be about 0.3% I would guess.

There is no obligation for anyone in the chain to actually pay you the Employer NIC per se - it's all just an agreed rate from which NIC, Margins, Pensions etc can be deducted from by the Umbrella.

So I would definitely ask more about how it will work and get a full illustration of an example weekly / monthly payment to see how the umbrella will break it down.

I think its either i) the agency pulling a fast one trying to take extra money out in the middle or ii) the public sector client being clueless, and trying to do something to cover their own backs

Yes I will ask etc

anyone working inside IR35 already able to tell me how its setup for them?

[CoolCat]

Anyone working inside IR35?

Care to explain how it works? one public sector hiring organisation is proposing to withhold employers national insurance from the rate, surely this isnt correct? surely your own LTD is obliged to pay the employers NI ?

Cheers

[jamesbrown]

Care to explain how it works? one public sector hiring organisation is proposing to withhold employers national insurance from the rate, surely this isnt correct? surely your own LTD is obliged to pay the employers NI ?

Cheers

See the FAQ, notably here.

The fee payer is required to operate PAYE correctly, which means deducting NI appropriately. If you're direct, the fee payer is the PSB.