The IR35, also known as off-payroll working, rules are a set of regulations that govern how contractors are paid. These rules are designed to ensure that contractors are paid fairly and accurately. In this article, we'll show you how to set up IR35 in QuickBooks Online Advanced Payroll. Plus, we'll cover how to add a deemed employee.
For more information, check out the HMRC IR35 guidance.
Note: IR35 is currently not supported in Standard Payroll.
Set up IR35 in Advanced Payroll
- In QuickBooks, go to Payroll.
- Select the Payroll Settings tab.
- Under Business settings, select HMRC Settings.
- Find IR35 contractors.
- Select Yes.
- Select Save.
Add a deemed employee
The first thing you need to do is make sure that the employee meets the criteria for being classified as a deemed employee. To do this, you will need to look at the employment contract and see if it falls within the scope of the IR35 legislation.
You will need to add them to your payroll in the same way as you would any other employee. The only difference is you'll need to select IR35 legislation applies when you're in the employee's tax and NI details section.
Once the employee has been set up they will be identified as an IR35 contractor in the employee details. You can then process and include the deemed employee in a pay run to calculate tax and NICs due.