IR35 Deemed Payment FAQs

What happens to the IR35 deemed payment at the end of the tax year?

The IR35 deemed payment is simply a means of calculating any tax and NICs due. Your company does not have to pay anything to you, but it does have to pay the tax and NICs to HMRC.

What if the money is paid to me as a salary after the end of the tax year, rather than as dividends?

Any money paid as salary will be subject to the normal PAYE and NICs rules, whenever that salary is paid. Any salary paid in a later year will reduce the amount of the IR35 deemed payment in the tax year in which it is paid.

If your company pays you a salary after the end of a tax year in which you have paid tax and NICs on an IR35 deemed payment, and your salary in the later year is more than the amount your company receives from engagements covered by the legislation, after deductions, then you may pay more tax and NICs than you need. You should seek advice from your contractor accountant if you think this situation applies to you.

What happens if my company does not pay me any salary?

If your company is treated as making an IR35 deemed payment to you, but actually uses the money to pay dividends to you (or others), then the rules ensure that those dividends can be paid without further tax becoming due. The dividends can be paid during the same tax year as the IR35 deemed payment or in a subsequent year.

Your company should advise HMRC about any dividends it has paid which it wants to be exempted under this rule. HMRC will need the following information.

1. The name and tax reference of the company making the claim.
2. The name(s) and tax reference(s) of the person(s) who received the dividend(s).
3. The amount of the dividend paid to each person and the total amount paid.
4. The date (or dates) the dividend was paid.
5. The amount of the IR35 deemed payment and the date on which it was treated as paid.
6. The person who has received the dividend does not have to do anything to claim any relief.

What happens if my company or partnership fails to follow these rules?

If your company or partnership fails to follow these rules and does not pay the tax and NICs due; HMRC will collect any unpaid tax or NICs and any interest due. In addition, penalties may be sought in cases of negligent or fraudulent conduct.

What key dates do I need to remember?

• 5th April: Calculate your IR35 deemed payment.
• 19th April: Send HMRC any tax and NICs due on the IR35 deemed payment, or a payment on account of any tax and NICs due.
• 19th May: Send your End of Year PAYE returns (forms P35 and P14) to HMRC and include any IR35 deemed payment and tax and NICs due in it on these forms. If you have not yet finally calculated your IR35 deemed payment, then tell HMRC in a covering letter that your figures are only provisional.
• 31st January If you only sent HMRC provisional figures on 19 May, then send us corrected form P35 and P14 figures now, and pay any balance of tax and NICs due at the same time. If necessary, issue a corrected P60 to your employee at the same time. If you do not do this, penalties may apply.