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Introduction - the deemed employment payment

This guidance note covers the position where a contractor is working through an intermediary within the off-payroll working for small clients rules - see the Off-payroll working (IR35) ― small clients ― overview guidance note. Where these rules apply, there is a requirement for the intermediary to:

1. •

   calculate the deemed employment payment (the term used for tax which is used throughout, although it is called the ‘attributable earnings’ in the NIC legislation)

2. •

   calculate and pay over the tax and NIC due to HMRC

The diagram below shows the interaction of the deemed employment calculation with an intermediary structure:

Tax and NIC on the deemed employment payment / attributable earnings

Separate legislation is in place for tax and NIC ― see the Off-payroll working (IR35) for small clients ― particular NIC points and tax planning guidance note for more on all of the points below.

For tax, the calculation is known as the ‘deemed employment payment’ calculation,