Calculating and accounting for the Deemed Direct Payment for off payroll working (IR35)

By Tolley
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The following Employment Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Calculating and accounting for the Deemed Direct Payment for off payroll working (IR35)
  • Fee payer responsibilities
  • Intermediary responsibilities
  • Worker’s responsibilities

Where the off payroll working rules apply (see the Off payroll working (IR35) in the public sector ― overview guidance note), the fee payer is required to calculate and settle the PAYE on the Deemed Direct Payment (DDP).

ESM9000ESM9095; HMRC guidance: Fee payer responsibilities under the off payroll working rules 

The fee payer is responsible for the deduction of tax and NIC from payment, and will account for these amounts to HMRC via Real Time Information (RTI) in the same way as for employees. The fee payer also pays employer’s NIC on top of the DDP.

Fee payer responsibilities

When the fee payer receives the employment status determination from the public sector body, or passed down the chain to them where it’s a longer supply chain, and the off payroll working rules apply, the fee payer is required to calculate the DDP, account for PAYE on the DDP and report to HMRC through RTI. These rules apply to any payments made to the worker’s intermediary on or after 6 April 2017 regardless of when the work was carried out.

ITEPA 2003, s 61R; SI 2017/373, reg 18;

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