Under IR35 - Capita is charging me Apprenticeship Levy Tax

[ladymuck]

Why is this thread in General?

I used to think General (as it is under the Contracting category) was for general contracting questions not covered by the other forums, and that the Social forums covered all the fun stuff. That said, this really should be under Accounting / Legal.

[northernladuk]

The title and a quick scan of the posts should have cleared that up in seconds. They should rename General Bantz or something though.

[northernladyuk]

Probably the easiest thing is to pay the 0.5%, give notice to terminate the contract and offer to start a new contract with an additional 0.5025% on the day rate.

[TheFaQQer]

Probably the easiest thing is to pay the 0.5%, give notice to terminate the contract and offer to start a new contract with an additional 3% on the day rate.

FTFY - if they can try it on, why not the contractor?

[northernladyuk]

Another option is to knock off 2 1/4 minutes early every day.

[nelsonswork]

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!

Thanks, I wasn't aware of any discrepancy. I'll raise it with my accountant.

[ladymuck]

Thanks, I wasn't aware of any discrepancy. I'll raise it with my accountant.

Ignore me, see Eek's post which cleared it up:

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....

[nelsonswork]

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

Structure is: Public Sector Client -> Capita -> My LTD Company -> Me

[eek]

Structure is: Public Sector Client -> Capita -> My LTD Company -> Me

Capita are therefore deducting the appropriate payments as the levy is based on employers NI payments and Capita is responsible for paying the employers NI part of your IR35 payments. See https://www.gov.uk/guidance/pay-apprenticeship-levy for the rules on how the apprenticeship levy is paid

As an employer, you’ll have to pay Apprenticeship Levy each month from 6 April 2017 if you:

• have an annual pay bill of more than £3 million
• are connected to other companies or charities for Employment Allowance which in total have an annual pay bill of more than £3 million

Your annual pay bill is all payments to employees that are subject to employer Class 1 secondary National Insurance contributions (NICs) such as wages, bonuses and commissions.

And to avoid any avoidance lets show how an IR35 contract is now paid:-

Employers NI deducted from the invoice and paid by the agency directly
Employees NI paid on your behalf by the agency
Income Tax paid on your behalf by the agency

[NotAllThere]

Why is this thread in General?

Moved.