Income Tax is a form of tax that most workers pay on their employment income, to the government. National Insurance Contributions (NIC) help to pay for some state benefits including retirement pensions. You pay NIC if you are either employed or self-employed and aged 16 or over but below state pension age. The amount of NIC you pay depends on how much you earn.

LITRG’s website is full of detailed, helpful tax information for workers, including how income tax and National Insurance works if you are employed or self-employed and what to do if you think you have paid too much tax.

Intermediaries are entities within a supply chain that sit between the worker and the ultimate beneficiary of the worker’s services (sometimes called the end client, engager or hirer). Agencies, limited companies (personal service companies) and umbrella companies are all intermediaries.

Intermediary structures take various forms, so that there may be more than one intermediary in each supply chain, for example in the supply chain worker-umbrella company-agency-end client, there are two intermediaries, the agency and the umbrella company. In general, the more intermediaries there are, the higher the risk of problems for workers.

LITRG’s new report looks in depth at the use of labour market intermediaries and the problems that can arise for workers with them. One of the aims of the report is to help workers inform and protect themselves.

If you are providing services to an end client through a limited company, you must consider the impact of the intermediaries legislation (commonly known as IR35/the off payroll working rules).

These rules ensure that individuals who effectively work as employees are taxed as employees, even if they choose to structure their work through a limited company.

You can find out more about these rules on the LITRG website.

If you fall under the rules, it means the payment that the end client (or other entity in your supply chain that pays your limited company) makes to your limited company may be taxed under PAYE. But note that even in these circumstances, you are NOT classed as an employee of the end client for employment law purposes.

You can find guidance on the IR35/off payroll legislation and whether it applies to you on GOV.UK