IR35 needs be taken into consideration by any person who works for a client through an intermediary such as a limited company or partnership. Detailed guidance on this legislation is available on HMRC’s website (Intermediaries legislation).

The calculator on this page illustrates the potential impact of IR35 on a limited company where an employment relationship exists and has two parts. Note: whether or not an employment relationship exists depends on the substance of the relationship and on a number of factors. Detailed advice can be provided by SAIL (charges may apply):

1) Part 1 – this part reflects the standard deemed payment calculator operated by HMRC. This calculates the deemed payment HRMC would assume to be salary where an employment relationship exists. It is this deemed payment on which HMRC would calculate the PAYE and NIC contributions it believes should have been paid by the company in relation to the employment relationship;
2) Part 2 - this part shows the net impact on the limited company if IR35 and the deemed payment are applied

PART 1

Step One
a
Enter all payments and benefits received by the intermediary in that tax year in respect of the relevant engagements
?
b
Less 5% of the amount in box (a) to cover other unspecified expenses
Step Two
c
Enter payments or benefits received by the worker, or his family, in respect of the relevant engagements from anyone other than the intermediary which are not otherwise chargeable to income tax as employment income
?
d
Income (a – b + c)
Step Three
e
Enter expenses met by the intermediary, which could have been claimed as expenses against income tax if the worker had been an employee of the client and had paid for them himself
Step Four
f
Enter capital allowances in respect of expenditure incurred by the intermediary that the worker could have claimed if employed by the client and him or herself had incurred the expenditure
Step Five
g
Enter contributions to an approved pension scheme by the company for the benefit of the worker
Step Six
h
Enter employer’s Class 1 and Class 1A NICs paid by the intermediary for that year in respect of salary or benefits in kind provided to the worker during the year
Step Seven
i
Enter salary received by the worker from the intermediary which is already taxable as employment income (this does not include anything for which a deduction has already been given at Box (e).
j
Enter benefits in kind received by the worker from the intermediary which are already taxable as employment income (this does not include anything for which a deduction has already been given at Box (e).
?
k
Deductions (e + f + g + h + i + j)
l
Amount to be apportioned between deemed payment and employer's NICs (d - k)
Step Eight
m
Employer's NICs on the deemed payment
n
Deemed Payment (l - m)
PART 2

Impact on overall tax position

Additional PAYE 0
Additional NIC 0
Less: Lower corporation tax 0
Overall impact
0
  • Should you have any queries about any results, please speak to one of our advisors (advice may be chargeable).
  • SAIL Business Solutions Ltd does not warrant the accuracy of this calculator as individual circumstances may vary.