Contractor, sub contracting - Tax question

[noss]

Hi All

I am currently a contractor for a company which uses my services for design and consultancy related work for which I get paid around 1,300 per month (I am home based). I subcontract most of this design work to a designer in Russia and pay him around £400 per month.

I have the following two questions which I'd be grateful if I could get some advice on:

1. Do I pay tax on the £1300 or only on £900?

2. I also get other work done by another developer in Russia which is not related to my contract which comes to around £200pm extra for building a web based software which I hope to help me in my business. Will this be classed as an expense for me, so that my taxable income is £700 rather than £900?

Cheers

[NotAllThere]

Are you working as a sole trader, through your own limited company or through an umbrella company?

[Jessica@WhiteFieldTax]

1 £900

2 Almost certainly, taking taxable amount down to £700. There are a few esoteric situations when you may not get relief, but unlikely to come into play in reality.

Make sure you have some sort of contract for services with the Russian developer, to prevent HMRC trying to categorise them as a employee and pin the PAYE and NI on you.

NB reading first reply to thread, I'm assuming you are not working via umbrella?

[Greg@CapitalCity]

1 £900
2 Almost certainly, taking taxable amount down to £700. There are a few esoteric situations when you may not get relief, but unlikely to come into play in reality.

I'll second that.