Sub Contracting Tax Query?

[Bristol spark]

Im an electrician, and run under a Ltd company.

I recently did some work for a builder (as a sub contractor).

I sent him an invoice with materials and labour.


He is now saying he needs my UTR number, as he has to deduct 20% off my labour cost to pay HMRC?

Its around £3K labour cost, so a reasonable amount of Tax.


Now this has me confused, as surely i would then get taxed both ends?

Ive never had this come up before when sub contracting.

Anyone any ideas?

Cheers

[Countdown]

Have a look at this

https://www.gov.uk/what-you-must-do-as-a-cis-subco...

[2 sMoKiN bArReLs]

Bristol spark said:

Im an electrician, and run under a Ltd company.

I recently did some work for a builder (as a sub contractor).

I sent him an invoice with materials and labour.


He is now saying he needs my UTR number, as he has to deduct 20% off my labour cost to pay HMRC?

Its around £3K labour cost, so a reasonable amount of Tax.


Now this has me confused, as surely i would then get taxed both ends?

Ive never had this come up before when sub contracting.

Anyone any ideas?

Cheers

CIS is commonplace (and mandatory in construction industry)

If you are limited you can offset the CIS against your monthly PAYE (if you are registered correctly, which it sounds like you are not at present)

Long shot...but if you worked on CCTV or alarms they are exempt.

The contractor should have asked for this before you did the work. He should also have "verified" you.

[2 sMoKiN bArReLs]

....maybe he should have deducted 30% if you are not CIS registered

[Bristol spark]

Thanks guys, that seems to tie up. (As if all this tax/paye business was not complicated enough!)

I only pay myself a £1K/month salary of which the tax/ni is only around £60/month.
So i take it i then wont pay them any myself for a while?

Also looking at the link it should be 30% deducted as im not registered.


Also where do i get my UTR number from? Will it be in the PAYE software thing somewhere?

[bga]

You can get your UTR from the HMRC self assessment site (assuming you have a logon)

[Eric Mc]

Most people who are directors of their own limited companies also have to register to complete personal Self Assessment tax returns as well. It isn't always necessary to do this but by and large people in this position will probably mix and match their personal income from the company in the form of a combination of salary (under PAYE) and dividends.

You need to submit a self assessment tax return so that you can notify HMRC of your dividend income and pay the appropriate self assessment income tax arising.

If I were you I would have a chat with your accountant - assuming you have one.

[2 sMoKiN bArReLs]

Once you get registered for CIS don't forget the monthly (even nil) returns or you'll cop for £100 per month fine.

Good luck

[blindswelledrat]

Just a couple of things to be aware of.
The deductions aren't final, they are merely arbitrary amounts to reconcile at the end of the year so if you are paying yourself PAYE then you are likely to be able to claim back some.
I don't know the current rules but you may also be eligible for 'gross payment status' which means that your clients don't make any deductions. Certainly if you are a bone-fide subcontractor and supply materials and price jobs, you fit the criteria that I know of.
Finally, and most importantly, if you take on staff you will have to do the same for them if they are self employed.

[Eric Mc]

How can "staff" be self employed?

[blindswelledrat]

Eric Mc said:

How can "staff" be self employed?

How can "Eric" be so pedantic.