Paying limited company contractors through payroll

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Historically when paying a limited company contractor (an individual working for you but invoicing you through their own limited company, aka a “personal service company”) the payer does not have to consider whether there is an employment relationship.

Since 2017 public sector bodies have had to make such payments through payroll if the relationship would be one of employment were it not for the personal service company.

From 6 April 2020 this will apply to payers in the private sector, but only if turnover of the payer’s turnover is more than £10.2M.