Treasury written question – answered on 15th June 2022.

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Photo of Jim Shannon Jim Shannon Shadow DUP Spokesperson (Human Rights), Shadow DUP Spokesperson (Health)

To ask the Chancellor of the Exchequer, what assessment he has made of the obligations of employment agencies and umbrella companies under schedule 44, section 2 of The Income Tax (Earnings and Pensions) Act 2003.

Photo of Lucy Frazer Lucy Frazer The Financial Secretary to the Treasury

Most agency workers must be treated as employees for Income Tax and National Insurance contributions (NICs) purposes by the agencies that pay them. These agencies are required to make deductions of Income Tax and employee NICs, where these are due, from the workers’ pay in the same way and at the same level as with direct employees. The agencies will also be liable to pay employer NICs, where these are due, in respect of payments to the workers.

The rules for agencies do not apply to umbrella companies, which engage workers under a contract of employment. Like all employers, umbrella companies are responsible for making deductions of Income Tax and employee NICs from their employees’ pay and for paying employer NICs where they are due.

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