Under new rules introduced by the draft Finance Bill 2017, the University will have to deduct PAYE and National Insurance Contributions (NICs) from payments made to Personal Service Companies (PSC). A PSC is a limited company that typically has a sole director, the contractor/individual supplying personal services, who owns most or all of the shares. This also applies to partnerships.
Example
J Bloggs has a personal service company (Excel IT Ltd) through which he provides his services as an IT specialist.
SHU engages J Bloggs, via Excel IT Ltd, for a period of 6 months to cover the maternity leave of a member of staff. He is to all intents and purposes an employee (his work is directed and controlled by SHU).
Excel IT Ltd invoices SHU and gets paid for J Bloggs’ services.
Under the new rules SHU will need to deduct PAYE and Employee’s National Insurance Contributions (NICs) from the payments made to Excel IT Ltd and will need to pay these amounts and Employer’s NICs over to HMRC.
If you are aware of any arrangements currently, or in the last 12 months, that may fall under the new rules please contact Financial Accounts (! FIN Financial Accounts)
For further examples and to find out more about the new rules, please view the Additional Information – Off-payroll workers document.