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TonyTax
TonyTax, Tax Consultant
Category: Tax
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Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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I have first time opted to be paid via PAYE as opposed to

Resolved Question:

I have for the first time opted to be paid via PAYE as opposed to through a Limited Company. The agency I am working for and I agreed for them to pay me a day rate of £550. They told me if I choose to be paid the PAYE route then I would have 13% Employers NI deducted from my day rate which would make my day rate now £483.30.
I am querying this as I don’t believe Employers NI should be deducted from my day rate and that this is their responsibility to pay. I am only responsible for the Employees NI and other employee deductions.
I raised this and this is the response they sent me. Can you please confirm whether this is correct?
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The amount any client pays us is based on the assumption they are a Ltd company contractor. If someone chooses to go PAYE they are shifting the responsibility for employers NI from their Limited company to us. The overall amount remains the same. It is not possible to simply switch options from Ltd to Paye and assume the tax will be paid from elsewhere. If that were possible, everyone would be doing it.
Submitted: 1 year ago.
Category: Tax
Expert:  TonyTax replied 1 year ago.

Hi.

Frankly, the agency is wrong. Employer's NIC is the liability of the employer. If you are an employee of the agency, then they are responsible for the Employer NIC.

If you operated though your own limited company, provided you were IR35 compliant, you could limit your salary so as to pay no employee NIC or employer NIC and draw income in the form of dividends which are not liable to NIC.

The agency doesn't want the responsibility of being an employer. They should be honest and say that the day rate for employees is less than for those who operate through their own limited company.

I hope this helps but let em know if you have any further questions.

Expert:  TonyTax replied 1 year ago.

Hi.

I'm just following up to find out if my answer helped or if you have any further questions.

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