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The government confirmed it will legislate in Finance Bill 2019 to amend ITEPA 2003 and the relevant National Insurance contributions regulations so that when an individual works for a medium or large-sized organisation in the private sector through their own personal service company:
- the party paying the worker’s company is treated as an employer for the purposes of income tax and class 1 National Insurance contributions;
- the amount paid to the worker’s intermediary for their services is deemed to be a payment of employment income or of earnings for class 1 National Insurance contributions for that person;
- the fee-payer is liable for secondary class 1 National Insurance contributions and must deduct tax and National Insurance from the payments they make to the worker’s intermediary; and
- the person deemed to be the employer for tax purposes is obliged to remit payments to HMRC and to send information about them using real time information.
This measure will...
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