Part 2

Employment income: charge to tax
Chapter 9

Managed service companies

The deemed employment payment

Application of Income Tax Acts in relation to deemed employment
61G
1
The Income Tax Acts (in particular, the
PAYE
provisions) apply in relation to the deemed employment payment as follows.
2
They apply as if—
a
the worker were employed by the
MSC
to provide the relevant services, and
b
the deemed employment payment were a payment by the
MSC
of earnings from that employment;
but this is subject to subsection (3).
3
No deduction under Part 5 (deductions allowed from employment income) or section 232 (mileage allowance relief) may be made from the deemed employment payment.
4. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6
Where the
MSC
is a partnership and the worker is a member of the partnership, the deemed employment payment is treated as received by the worker in the worker's personal capacity and not as income of the partnership.
7
Where—
a
the worker is resident in the United Kingdom, and
b
the relevant services are provided in the United Kingdom,
the
MSC
is treated as having a place of business in the United Kingdom, whether or not it in fact does so.
Pt. 2 applied (E.W.S.) (31.3.2017) by The Equality Act 2010 (Specific Duties and Public Authorities) Regulations 2017 (S.I. 2017/353), reg. 1(1), Sch. 1 para. 4(3) (with reg. 2(4)(5))
Pt. 2 Ch. 9 inserted (retrospective to 6.4.2007) by Finance Act 2007 (c. 11), s. 25(2), Sch. 3 para. 4
Pt. 2 applied (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), ss. 969(4)(a), 1329(1) (with Sch. 2 Pts. 1, 2)
S. 61G(4)(5) omitted (for the tax year 2025-26 and subsequent tax years) by virtue of Finance Act 2025 (c. 8), s. 40(4), Sch. 9 para. 14