Many more people are using their own limited companies to provide services to clients. Commonly knows as personal service companies (PSCs), they have been on HMRC’s radar for some time. New rules for PSCs engaged in the public sector are being introduced by HMRC from April 2017.
Where you provide your services to a public authority client through a PSC, and there is a deemed employment relationship – the agency, recruitment company or public sector body, must now operate payroll taxes on the individual behind the limited company.
In essence, this means that Income Tax and primary Class 1 NIC should be deducted from any payment being made to the PSC. The fee payer (agency or public sector body) would also have to pay secondary Class 1 NIC on the payment.
An online tool will be available for agencies or public sector clients to establish whether the ‘off-payroll’ working legislation should apply.
More information can be found by accessing HMRC’s guidance HERE.
Alternatively, contact the office on 01698 373200 to review your position with one of our accountants.