Mr F works through a service company, F Services Ltd, in which he owns all of the shares. F Services Ltd receives £60,000 during the year of which:
F Services Ltd incurs the following expenses during the course of the year:
The deemed payment is calculated as follows:
| Step One | Income from relevant engagements | 40,000 | |
| Deduct | |||
| Step One | 5% flat rate allowance | 2,000 | |
| Step Three | Expenses | 500 | |
| Step Five | Pension contributions | 4,000 | |
| Step Six | Employer’s NICs paid in year | 1,905 | |
| Step Seven | Salary paid in year | 20,000 | |
| Total deductions | 28,405 | 28,405 | |
| Net amount | 11,595 | ||
| Step Eight | Employer’s NICs on deemed payment | 1,261 | |
| Step Nine | Deemed payment | 10,334 |
