self employed/subcontractor

[trackwa]

my son has just registered as self employed however we are a bit unsure as to wether or not he is classed as a subcontractor?? He is labouring for another guy sho has his own electrical co (although he is a one man band) however he does get other jobs (plastering jobs) as he is a plasterer. So he will invoice the electircian but will also invoice individuals for plastering work??

Is he self employed or a sub contractor? we have been told that if he only has 1 or 2 people/companys he invoices then he will be classed as a subcontracotr.

sorry if i havent explained it very well

HOpe you can help
Thanks x

 

[Williams lester]

Surely he is a self employed subcontractor? Not sure what is the purpose of the question you are asking?

 

[trackwa]

the reason i am asking is who pays his tax????? Does he pay it or does the Electircain pay it on his behalf?? Sorry if I am not very clear but i dont really understand it all.
Thanks

 

[davidakerr]

If your son is self employed then he is responsible for his own tax affairs including payment to the IR. He should also register with the IR within 3 months of becoming self employed otherwise the IR will jump all over him.

If

 

[trackwa]

Thanks you for your reply

He has already registered as self employed however i am being told (by friends/family) that if he does work (labouring) for the electrician then this is work as a sub contractor therefore the electircain needs to deduct the tax??? If this is true is there anyway of him getting round that then he is fully responsable for his own tax?

Thanks again
Tracey

 

[davidakerr]

I assume he can invoice the electrician for the work he does, therefore he is effectively self employed and will be responsible for his own tax on the amount he invoices. I do work for a variety of different people and invoice them for the amounts involved. I am then responsible to the IR for the tax on the income earned, less expenses.

 

[cmcp]

If he is employed by the electrician as an employee the electrician would pay his tax.

If he is subcontracted by the electrician then your son pays his own tax as self employed.

 

[David Griffiths]

If he is subcontracted by the electrician then your son pays his own tax as self employed.

Not the case, I'm afraid.

If he is subcontracted then the electrician must verify his status with the CIS helpline and deduct tax, normally at 20% but if the son hasn't registered as a subcontractor then the deduction is likely to be 30%.

The son still has to prepare a self assessment return each year and calculate tax, taking into account the deductions made by contractors. There might be a repayment, there might not.

If he hasn't registered as a subcontractor, he should do so now on the CIS Helpline - he will need his tax reference and NI Number. 0845 366 7899 - open from 8am to 8pm, although if they're a bit busy it's not unknown for them to tell you to shove off and ring back later!

If he is a subcontractor then it's up to the main contractor to get the status right. If HMRC subsequently decide that he was really and employee, they'll go after the electrician for the tax and NI

 

[Jenni384]

Cheers David, you beat me to it!

^What he said.

 

[cmcp]

I stand corrected, sorry!

 

[A2Z Joiners]

Same as most folk in building trade on sites, tax paid by your sub contractor and fill out tax returns every year, best to get an accountant to help as you usually get a good tax rebate, but he'll have to get his unique tax reference number off the inland revenue (they done away with cis cards) then his employer notifies the inland revenue.

 

[trackwa]

Thanks you so much for your replies, so i guess what i have been told is correct.

Thanks again for confirming it. I will pass all the info onto him.

Tracey

 

[cmcp]

sorry about the confusion!