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Contractor and tax help..

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    Contractor and tax help..

    Morning chaps,
    I’m currently self employed electrician, my business is doing very well and I’m looking to take someone on on a self employed basis not employed.
    How do I go about this paying him legally etc? Would I need to register as a contractor or could he invoice me each week and I pay him that way?
    Also what happens to other contractors i work for as they take my 20% off before paying me so how would I then pay my workmate from that?

    #2
    Originally posted by ainsleyg81 View Post
    Morning chaps,
    I’m currently self employed electrician, my business is doing very well and I’m looking to take someone on on a self employed basis not employed.
    How do I go about this paying him legally etc? Would I need to register as a contractor or could he invoice me each week and I pay him that way?
    Also what happens to other contractors i work for as they take my 20% off before paying me so how would I then pay my workmate from that?
    Afternoon! Bit of a difficult one this because this is an IT Contractor forum so you may not get the info you need.

    Also, it's not clear if you get your work as a 'sub contractor' all the time since you say other contractors you work for take 20% off before paying you. Is that commission as it seems on the low side for tax and NI?

    Essentially, if you want to take someone else on as a sub contractor, I personally dont think you should do this if you are sub contracting yourself. Whoever is paying you will probably expect you to pay your subbie out of what they pay you.

    You might want to search out the Federation of Small Businesses who may be able to offer somebetter advice.

    Comment


      #3
      Largely an IT contractor forum, but not exclusively. But definitely not a building contractor forum.
      Down with racism. Long live miscegenation!

      Comment


        #4
        The easiest way to do this is to pay them as self employed. That way they are responsible for legal compliance. Just keep accurate records.

        The bit that might make it complicated is where you have to do tax deductions by CIS. On this forum we can’t really help with that but your accountant should be able to help. If you don’t have an accountant now might be a good time to think about one.

        As for how much margin to make. That’s entirely up to you.
        See You Next Tuesday

        Comment


          #5
          Originally posted by ainsleyg81 View Post
          Morning chaps,
          I’m currently self employed electrician, my business is doing very well and I’m looking to take someone on on a self employed basis not employed.
          How do I go about this paying him legally etc? Would I need to register as a contractor or could he invoice me each week and I pay him that way?
          Also what happens to other contractors i work for as they take my 20% off before paying me so how would I then pay my workmate from that?
          You'll need to register as a Contractor under CIS. Since you mentioned you get 20% deducted from your work, we'll assume you're already registered as a subcontractor on a deduction rate of Net 20% which you would normally declare as being deducted from you when you fill out your self assessment tax return. So, since you're already registered as a subbie, go here (What you must do as a Construction Industry Scheme (CIS) contractor: How to register - GOV.UK) to register as a contractor.

          Once registered, you'll need to get your subbies UTR so that you can verify whether they're on gross payment or 20% Net. Once you have verified them, you can deduct the necessary tax from them before paying their invoice for the work they do for you. You'll also need to file a CIS return each month by 19th to avoid an automatic £100 late filing penalty and pay over any CIS deducted from your subbie by the 22nd of the month.

          Comment


            #6
            Thanks Chaps.

            I know the OP is in construction but I thought one of our accountant regulars could help with this.

            Hands over the divide in these times and all that...
            "I can put any old tat in my sig, put quotes around it and attribute to someone of whom I've heard, to make it sound true."
            - Voltaire/Benjamin Franklin/Anne Frank...

            Comment

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