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Sam, Accountant
Category: Tax
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Experience:  26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
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I have a "contract for services", Tax and NI is deducted each

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I have a "contract for services", Tax and NI is deducted each pay period after any relevant expenses have been taken into account. I am not an employee but elect to pay PAYE this way, do I have to complete a year end Self assessment or do they agency deducting PAYE have to submit P11D for me ???





Thanks for your question I am Sam and I am one of the UK tax experts here on Just Answer.



Its unlikley that you will need to complete self assessment each year but HMRC would have advised if this was the case - have they advised this is so, or issued you with a notice to complete and fie self assessment ?

(Of course if your income is in excess of £42475 a year then or you have other sources of income, then self assessment is then likely to be the case)



And whilst you state you are not an employee you are being treated as an employee for tax purposes, so then the answer regarding the P11d is yes, as you are treated as and employee and this company reimburse you out of pocket expenses, which will need reporting to HMRC and this is through the completion of a P11d for you.


Of course if they have a dispensation in place, which recognises, that these specific expenses for you are wholly and exclusively in the performance of your duties, and HMRC have agreed through the dispensation that no P11d is required then this company would have advised you, that this is the case, but you do not indicate this.



If your employer has no dispensation then a P11d must be completed by them, and if all the expenses are allowable expenses due to the fact that were incurred through the performance of your duties, then you can make a S336 claim, which asks HMRC to recognise, that all the expenses were wholly and exclusively in the performance of your duties and you should not be taxed on the amounts paid.

This prevents an incorrect tax bill from HMRC!






Customer: replied 3 years ago.

Thanks Sam


Unfortunately I am still confused, I am not an employee and hence have no employer to submit P11D, I have looked and S336 and P87 on HMRC and again these relate to employees.


As I am self employed but elect to pay tax and NI after expenses that are wholly & exclusively for the purpose of my role have been taken into account (not repaid to me, eg. Gross pay £500, expenses £100, tax and NI calculated on £400 the calculated tax & NI is then deducted from the £500, like an umbrella I understand but no over arching contract, so I am self employed????


Thanks for your response

But you are treated as an employee for tax purposes as you advise that the business that engages you operates PAYE on the income they pay you- you are either an employee or you are not, as under the taxes act - if you are paid as an employee then you are treated as an employee throughout all aspects of that engagement (you cannot just pick and choose which aspects of the tax position you choose to adhere to)

And you now advise that the scheme is like an umbrella.
Please note that even as an umbrella company you are the employee (director) of that umbrella company and sill are required to have PAYE deducted from your pay and therefore still have to ensure a P11d is returned to HMRC with the annual P11db to detail any expenses you have been paid.
If the scheme under which you are engaged operates like an Umbrella company then PAYE and P11d will also apply to you in your paid position. You bcome a director/employee of that company.

And as the expenses are taken off the gross pay BEFORE consideration of any tax and National Insurance - then you are having these paid GROSS to you, without deduction of tax, so a P11d MUST be completed due the way in which you are engaged by the company.
Even normal limited companies see the directors treated as employees.

You are not self employed (that applies to sole traders or partnerships where the total income is declared - expenses claimed from the gross income and tax and National Insurance then considered on ALL remaining income) You are clearly operating under a scheme that treats you as an employee - as both tax and National Insurance is deducted via PAYE - and you advise its like an Umbrella company - this consolidates the position fully - that a P11d will be required - unless you have a dispensation in place.





You are NOT self employed and I am not sure what gives you the idea that you are - are you engaged through an agency - perhaps they are adding confusing to the mix -
Sam and other Tax Specialists are ready to help you