Deemed Employment
Payroll for
Limited Company
Contractors

Working inside IR35? KAPS Contracts handles your deemed employment payroll — correctly, compliantly, and transparently — so you keep your limited company and get paid on time, every time.

How It Works Get In Touch
£20/wk Flat fee — nothing hidden
RTI Real-time HMRC reporting
Your PSC Limited company stays intact
Professional contractor reviewing documents
Chapter 10, ITEPA 2003
Understanding Your Status

What Is Deemed Employment?

When a contractor is determined to be inside IR35, the off-payroll working rules require Income Tax and National Insurance to be deducted at source. Deemed employment is the HMRC-approved method for handling this — without creating an employment relationship.

You Keep Your Limited Company

Unlike umbrella employment, you remain a director of your own PSC. Deemed employment is a tax mechanism — not an employment contract.

Tax Deducted at Source

Under Chapter 10, ITEPA 2003, Income Tax and National Insurance Contributions are calculated and remitted to HMRC before your company receives the net payment.

No Employment Relationship

KAPS is not your employer. We process the deemed payments on your behalf. Your PSC and your independence remain fully intact.

Full Compliance, Every Payment

Every payment is reported to HMRC in real time via RTI. You receive a full payslip with a complete, auditable breakdown of every deduction.

The Payment Process

How You Get Paid

Straightforward from start to finish. Here is exactly what happens between your assignment being confirmed and money arriving in your company account.

1

Your agency confirms hours or days worked

Your recruitment agency or end client confirms the time you have worked for the period. That confirmation triggers the process — no chasing required on your part.

2

We raise a self-bill invoice for your limited company

We create and process the invoice on behalf of your PSC. You do not need to raise or send any invoices yourself.

3

We calculate and deduct tax and National Insurance

Income Tax and both employee and employer NIC are calculated precisely and submitted to HMRC via Real-Time Information reporting.

4

Our service fee is deducted

A flat fee of £20 per week (or £60 per month) is deducted — clearly shown on your payslip. No percentage, no hidden extras.

5

Net payment goes directly to your limited company

The remaining balance is transferred straight into your company bank account — not to you personally. Your PSC receives the payment.

6

You receive a detailed payslip

A full breakdown showing gross pay, every deduction line by line, and the net amount paid to your company. Everything your accountant needs.

7

Your accountant handles the rest

Corporation tax, dividends, annual accounts — that is your accountant's domain. We give them everything they need. Nothing falls through the cracks.

Contractor reviewing their payslip and financial records
Transparent Pricing

Simple, Flat-Rate Fees

No percentage-based charges. No hidden extras. Just a flat fee that covers everything from payroll processing to HMRC compliance.

Weekly
£20
per week
  • Payroll processing & RTI submission
  • Self-bill invoicing for your PSC
  • Detailed payslip every payment
  • HMRC compliance & reporting
  • Accountant liaison pack
Get Started
Monthly
£60
per month
  • Payroll processing & RTI submission
  • Self-bill invoicing for your PSC
  • Detailed payslip every payment
  • HMRC compliance & reporting
  • Accountant liaison pack
Get Started

Both options cover exactly the same services. Choose whichever suits your payment schedule. No lock-in, no minimum term.

What We Do For You

Everything Handled, End to End

From raising the invoice to providing year-end figures for your accountant — KAPS takes care of the operational side of your deemed employment payroll.

Self-Bill Invoicing

We raise invoices on behalf of your limited company. No chasing, no paperwork, no admin burden on you.

PAYE & National Insurance

All Income Tax and NIC deductions — employee and employer — calculated precisely and submitted to HMRC each payment period.

Real-Time Information (RTI)

Every payment is reported to HMRC in real time as required by law. Full compliance, automated, every single time.

Payslips & Records

Detailed payslips for every payment showing gross, all deductions, and net pay. Available whenever you or your accountant needs them.

Insurance Assistance

We help you arrange appropriate professional indemnity and public liability insurance for your contracts — a requirement with most agencies.

Limited Company Setup

Need to incorporate your PSC? We will guide you through the process and connect you with the right professionals to get it done properly.

Accountant Liaison

We provide your accountant with everything they need: payment records, tax deductions, employer NIC figures, and year-end data. Clean handover, no gaps.

Who We Work With

Contractors Across Every Sector

From oil rigs to operating theatres, boardrooms to server rooms — wherever contractors work inside IR35, KAPS Contracts ensures you are paid correctly, compliantly, and on time.

Oil and gas contractor on industrial site
Oil & Gas / Energy Offshore & onshore contractors
Healthcare professional, NHS nurse
Healthcare & NHS Locum & agency medical staff
Management consultant in modern office
Management Consulting Strategy, change & transformation
IT contractor and developer at workstation
IT & Technology Developers, architects & analysts
Understanding Your Pay

A Typical Payment Breakdown

Here is what a typical weekly payment looks like for a contractor on £450 per day. The structure is always the same — transparent, line by line, every payment.

Example Weekly Payment — £450/day (£2,250/week)
Client Rate (weekly)£450/day × 5 days
£2,250.00
Less: Employer's National Insurance15% above secondary threshold (£96/wk)
−£277.08
Less: Apprenticeship Levy0.5% of assignment rate
−£9.72
Less: KAPS Service FeeFlat weekly fee — all-inclusive
−£20.00
Assignment RateYour gross deemed payment for PAYE purposes
£1,943.20
Less: Income Tax (PAYE)Deducted at source — tax code 1257L
−£535.40
Less: Employee National Insurance8% above primary threshold £242/wk
−£77.52
Net Payment to Your Limited Company
£1,330.28

Tax and NIC figures are illustrative based on tax code 1257L and 2026/27 HMRC rates. Your actual amounts depend on your tax code and day rate. Figures generated by the KAPS illustration engine.

VAT Explained

VAT — Paid Directly to Your Limited Company

If your limited company is VAT registered, VAT is an entirely separate flow — it is not a deduction and does not reduce your net pay.

How VAT Works in Your Assignment

VAT is charged on the self-bill invoice raised to KAPS on behalf of your limited company. The full VAT amount is remitted to your limited company regardless of any payroll deductions made.

If your limited company is VAT registered, VAT can be accounted for in the usual way — including any Flat Rate VAT Scheme benefits.

VAT is entirely separate from the deemed employment payroll deductions shown above. Your accountant handles your VAT returns — we provide all supporting documentation.
Self-Bill Invoice Example
Assignment Rate £1,943.20
VAT at 20% £388.64
Less: Income Tax (PAYE) −£535.40
Less: Employee National Insurance −£77.52
Net Payment to Limited Company £1,330.28
Plus: VAT Remitted to Limited Company £388.64
Total Payment to Limited Company £1,718.92

Your limited company receives £1,330.28 net pay plus £388.64 VAT — a total of £1,718.92 per week. VAT is entirely separate from payroll deductions. Your accountant handles VAT returns — we provide all supporting documentation.

Working With Your Accountant

We Handle Payroll.
Your Accountant Handles the Rest.

KAPS and your accountant work in parallel — and we make sure there are no gaps between us.

KAPS Handles

  • PAYE payroll processing
  • RTI submissions to HMRC
  • Self-bill invoicing
  • Employee & employer NIC
  • Payslips & payment records
  • Year-end payroll figures

Your Accountant Handles

  • Corporation tax return
  • Annual accounts
  • Dividend planning
  • VAT (if registered)
  • Self-assessment return
  • Director's salary structure

"Think of us as the payroll department your limited company never had."

Professional discussing finances with contractor
Get In Touch

Ready to Get Started?

Talk to us about your assignment, your current payroll arrangements, or anything you want to understand about deemed employment. No jargon, no pressure.

Email

info@kapscontracts.co.uk

Registered Address

England & Wales — details to follow