Off payroll working (IR35) for small clients ― particular NIC points

Produced by a Tolley Employment Tax expert

Employment Tax

Guidance

This note covers the NIC position for the off-payroll working for small clients rules, the legislation and situations where the NIC position differs from the tax position.

Off-payroll working for small clients ― the NIC position

Separate legislation exists for tax and NIC. In most cases, both sets of legislation produce the same outcome, so that an engagement will either be within the rules, and thus liable for both tax and NIC, or outside, and liable for neither. However, this is not always the case.

The calculation of attributable earnings for NIC follows the same steps as the tax calculation for the deemed employment payment. See the Off-payroll working (IR35) for small clients ― calculating the deemed employment payment guidance note for step by step instructions. See also Simon’s Taxes E4.1011.

National insurance categorisation rules

An individual may be self-employed under the status tests (see the Establishing employment status guidance note) and therefore outside the off-payroll working for small clients rules, but treated as an employee (called an ‘employed earner’

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