do i need to pay tax again?

[scottleo86]

hi i am currently in the process of starting a partnership. the type of work i do means i will only work for one person/company. the income i receive has to be taxed at source. does that then mean that me and my partner will be able to just take a wage straight out of the business or would we individually have to pay tax again. or if there is a better way of doing this? any help would be greatly appreciated. thanks scott

 

[Scalloway]

Is the tax deducted CIS tax?

 

[scottleo86]

im not sure. currently im working for someone under the cis scheme. i want to cut them out and go straight to the client myself. i know that the client stops 20% before they pay the ltd company i work for. is that any help. i am new to it but know a few bits. thanks for your help

 

[Scalloway]

The 20% CIS is set against any tax you are due. If all your income has this deduction you should get some tax back when you submit your tax return.

 

[scottleo86]

sorry this is what im trying to get at. me and my partner do this.
we do £5,000 pounds worth of work.
we invoice company for £5,000
they pay our partnership account £4,000 after deducting 20% tax
can we then just transfer say £1,800 to each of our personal accounts without deducting any further tax. i know when we submit our personal returns we may owe or be owed tax depending on what we earn.

 

[Scalloway]

Any money in the partnership bank account is your own money. There are no tax consequence for either of you withdrawing it.

 

[scottleo86]

only reason for partnership is they wont pay an individual person. so we want to take nearly all of the money that goes into the account. maybe leaving £100 a week in there for accountancy costs end of year. so say at the end of the year i have taken £30,000 out of the account. what would i have to pay tax wise on that seen as i have paid 20% at source.

 

[Scalloway]

WIthout knowing your full personal circumstances I cannot give a definite answer. For someone on those figures with no other income no tax would be due.

 

[scottleo86]

this would be my only source of income. and to be conservative i would say £30,000-£35,000 i would take and same for my partner. so at the year end and we fill in our personal returns the twenty percent stopped is ok for us to put on our return or is that tax the company will get back? sorry if i sound stupid

 

[Scalloway]

Before I go further can I confirm that when you say partnership you mean a partnership, not a limited company?

 

[scottleo86]

yes it is a partnership

 

[Scalloway]

Then when you fill in your partnership tax return your share of partnership profit will go in the approriate box and your share of tax deducted will go in another.

 

[scottleo86]

right ok that sounds good. so overall the partnership has £60,000 paid in. £15,000 has already been stopped at source. we each take out £30,000. which would in the end equate to us not having a tax bill would that be correct?

 

[Scalloway]

On the figures given

Income.........................30,000
Less personal allowance...8,105
Taxable.........................21,895

Tax @ 20% £4,379

ncome.........................30,000
Less free.allowance.........7,605
Taxable.........................22,395

Class 4 NI at 9% £2,015

Total payable £6,395

 

[ustina]

I am Limited company working under CIS, I am contractor and subcontractor this same time. My contractor deducted %20 tax from my company income , should i deduct again every each my subcontractor by %20 or i do not. its look like double taxation, how is work offset tax,?

 

[Scalloway]

When you pay over the CIS tax you have deducted subtract the tax that has been deducted from payments to you.

 

[ustina]

do i still have to fill CIS return every months?

 

[Scalloway]

Yes you do

 

[ustina]

thank you for help, shall I understand that I have to fill CIS return but do not need to pay to HMRC because is paid already in source?

 

[Scalloway]

1. Add CIS deducted from your company
2. Add up CIS deducted by your company

If 1 is greater than 2 pay nothing and send in return
If 2 is greater than 1 pay HMRC the difference and send in return

 

[ustina]

Thank you very much Mr Scalloway, now I understand