HMRC has published new guidance setting out steps to calculate a worker’s statutory payment entitlement where the worker’s intermediary has received amounts net of income tax and class 1 primary NICs under the off-payroll working rules.
Payroll software calculates statutory payment entitlement by using the gross earnings subject to class 1 NICs from a relevant period. If a person has the requisite average weekly earnings, the software will calculate the level of statutory payment to pay to the individual.
As explained in HMRC’s Employment Status Manual (ESM10033A), when off-payroll working income is paid to a worker’s intermediary, it is already net of income tax and class 1 primary NICs. Therefore, no further deductions of income tax and NICs will be made from off-payroll working related payments made to a worker by their intermediary. As a result, payroll software will not automatically include these payments as earnings in the relevant period for statutory payment purposes. However, the worker’s entitlement should include all gross amounts of earnings subject to class 1 NICs paid in the relevant periods.
HMRC’s guidance highlights the process to be followed to ensure that consideration is given to the gross amounts, even though only net amounts of off-payroll working income will be processed within the payroll software.
HMRC has published new guidance setting out steps to calculate a worker’s statutory payment entitlement where the worker’s intermediary has received amounts net of income tax and class 1 primary NICs under the off-payroll working rules.
Payroll software calculates statutory payment entitlement by using the gross earnings subject to class 1 NICs from a relevant period. If a person has the requisite average weekly earnings, the software will calculate the level of statutory payment to pay to the individual.
As explained in HMRC’s Employment Status Manual (ESM10033A), when off-payroll working income is paid to a worker’s intermediary, it is already net of income tax and class 1 primary NICs. Therefore, no further deductions of income tax and NICs will be made from off-payroll working related payments made to a worker by their intermediary. As a result, payroll software will not automatically include these payments as earnings in the relevant period for statutory payment purposes. However, the worker’s entitlement should include all gross amounts of earnings subject to class 1 NICs paid in the relevant periods.
HMRC’s guidance highlights the process to be followed to ensure that consideration is given to the gross amounts, even though only net amounts of off-payroll working income will be processed within the payroll software.