Where the rules apply, the fee-payer (the public authority, agency, or other third party paying the intermediary) will calculate and deduct PAYE and both primary and secondary national insurance contributions (NICs) on the ‘deemed’ payment and pay them over to HMRC. The fee-payer must report the payments through the normal Real Time Information (RTI) provisions as if the worker had been a direct employee. These amounts will be deducted from the intermediary’s fee for the work provided.

The deemed direct payment is calculated using the following steps in accordance with s. 61Q ITEPA 2003:

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