Commentary on Sections Glossary Part 2: Employment income: charge to tax Section 54: Calculation of deemed employment payment
216.Subsection (1) sets out a method statement to show how to calculate the deemed employment payment. It derives from paragraph 7.
217.Steps 1 and 2  contain a cross-reference to section 55, so that readers know where to find out what amount should be taken into account in respect of any benefits.
218.After Step 2, all the remaining steps deduct various amounts. Step 3 contains a statement to the effect that if the result of that, or any later step, is nil or a negative amount, then there is no deemed employment payment.
219.Step 3 also contains a cross-reference to the deductions provisions in Chapters 1 to 5 of Part 5 so that the reader can see where to look to find out what kind of expenses may be deducted.
220.Step 8 of the method statement explains the operations involved in deducting the notional national insurance contributions.
221.The method statement concludes with a statement that the result represents the deemed employment payment.
222.Subsection (2) explains what to include in Step 1 of the calculation of the deemed payment if the intermediary has received amounts under deduction of tax because of the operation of section 559 of ICTA (sub-contractors in the construction industry). It is drawn from paragraph 8.
223.Subsection (3) provides that amounts deducted at Step 3 of the method statement may include certain reimbursed expenses. This derives from section 38(2) of FA 2002.
224.Subsection (4) and (5) provide that mileage allowance relief may be included in amounts deducted at Step 3 of the method statement. This derives from paragraph 7B as introduced by section 38(2) of FA 2002.
225.Subsection (6) is new. It applies for the purposes of working out the amount to be deducted at Step 3 of the method statement in respect of travel expenses. Entitlement to travel expenses depends on whether or not a workplace is “temporary” and where the worker is based over the course of the employment. Subsection (6) allows such travel expenses to be deducted at Step 3 as would have been available during the combined period of all the relevant engagements as if that combined period was a continuous employment with the intermediary. This new rule is a minor change to the law. See Change 13 in Annex 1.
226.Subsection (7) allows for mileage allowance payments or passenger payments to be deducted at Step 7 of the method statement. This derives from paragraph 7B as introduced by section 38(2) of FA 2002.
227.It is quite likely that the intermediary will receive payments from the client to cover the services of more than one worker or to cover the services of a worker and other things (such as materials, reimbursed fees to third parties etc). Subsection (8) sets out that in such a case any apportionment required to arrive at the amount attributable to the services of a single worker should be on a just and reasonable basis. It derives from paragraph 9.