Reply to: Under IR35 - Capita is charging me Apprenticeship Levy Tax

[eek]

Time to look for new work that isn't IR35 caught.

Best make the most of the next few months then...

[TheFaQQer]

Thanks for the feedback. It looks like I'm stuck paying this. I did negeoate more mony for this contract. It does not come anywhere close to the extra amount of taxes for IR35. I will pay 36%-40% tax now on all my income. I also still have compture equipment, software, hosting, insurance and accountant to pay. I now pay more tax then a avarge employee by at least 14%. Dosn't pay to contract with the goverment.

Time to look for new work that isn't IR35 caught.

[nelsonswork]

Thanks

Thanks for the feedback. It looks like I'm stuck paying this. I did negeoate more mony for this contract. It does not come anywhere close to the extra amount of taxes for IR35. I will pay 36%-40% tax now on all my income. I also still have compture equipment, software, hosting, insurance and accountant to pay. I now pay more tax then a avarge employee by at least 14%. Dosn't pay to contract with the goverment.

[eek]

Going brolly doesn't get you out of the levy. Lucy has confirmed elsewhere that Brolly's will be charging the levy to their contractors as well. If you are working through a Brolly via Capita then the brolly will deduct the levy instead of capita as the last payer in the chain.

I badly phrased it - it needs to be an umbrella with a payroll of less than £3m (unlikely to exist but you never know - its perfectly possible to run multiple companies with each keeping payroll less than £2.9m)..

[DaveB]

The public sector IR35 means that its not your company's responsibility to pay Employers NI but Capita (or whatever agency is the last party in the chain before your limited company) - and Capita definitely have a payroll over £3m.... To avoid paying the levy you need to use either an umbrella company or be working via an agency with a payroll of less than £3m...

TF also states that Capita may not have the right to deduct fees from your contract - I strongly suspect that isn't the case as you are not complaining about Employer NI deductions, just the Apprenticeship levy - but its worth checking.

Going brolly doesn't get you out of the levy. Lucy has confirmed elsewhere that Brolly's will be charging the levy to their contractors as well. If you are working through a Brolly via Capita then the brolly will deduct the levy instead of capita as the last payer in the chain.

[eek]

Thanks, my companys payroll is not more then 3 million and thus I should not pay the Apprenticeship Levy how ever Capita is debucting it before the payment to my company alongside Employers NI.

The public sector IR35 means that its not your company's responsibility to pay Employers NI but Capita (or whatever agency is the last party in the chain before your limited company) - and Capita definitely have a payroll over £3m.... To avoid paying the levy you need to use either an umbrella company or be working via an agency with a payroll of less than £3m...

TF also states that Capita may not have the right to deduct fees from your contract - I strongly suspect that isn't the case as you are not complaining about Employer NI deductions, just the Apprenticeship levy - but its worth checking.

[TheFaQQer]

Thanks, my companys payroll is not more then 3 million and thus I should not pay the Apprenticeship Levy how ever Capita is debucting it before the payment to my company alongside Employers NI.

If you have an agreement for Capita to deduct additional fees that they incur, then you have to pay it. If your contract allows for taxes and NI to be deducted, then you have to pay it. If your contract does not allow for Capita to deduct additional fees or taxes, then they need to agree that in your contract.

Just because Capita have to pay it does not give them the automatic right to pass that cost onto you.

[nelsonswork]

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

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

Thanks, my companys payroll is not more then 3 million and thus I should not pay the Apprenticeship Levy how ever Capita is debucting it before the payment to my company alongside Employers NI.

[Hobosapien]

Capita is behaving as agency and payroll service provider in this instance, so all looks above board to me as per Eek's explanation of what is going on.

Myself, I've confirmed that the rate I was offered by the client when tempting me back to PS is exactly the same as what the payroll service of the chain (yet to be sorted out) will receive from the agency, that Capita said I would need (not willing to be agent themselves for some reason).

So any fees that Capita and the agency are charging to be in the chain will be handled by the client and any fees the payroll service will charge/deduct (including tax and levy) will come out of the rate I am expecting. Hence the client agreeing a rate increase of 30%+ to cover me being inside IR35 when previously I was outside.

[l35kee]

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

So Capita is handling the billing on behalf of the client?

I think it's important to clarify that this is different to being contracted to Capita to deliver a project that happens to be for a public sector client... Right, right?!?!

Right?

[eek]

Moved.

But to the wrong forum - this is an Accountancy / Public Sector IR35 question not a business one....

[NotAllThere]

Why is this thread in General?

Moved.

[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

[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

[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....