Advice needed please,if allowed,and able

[lottie dolly]

If a self employed small man, hires a person,taking Tax & ins out before pay,is it correct that the person taken on,has to register self employed too,any words of wisdom greatly appretiated

[selwood]

If you employ anyone who is self employed they should sort out all there own tax&insurance you just need an invoice from them so you can take there costs of you tax bill.
You would have to set up a a paye scheme to take there tax&insurance at source as such
Well worth getting some advice from a accountant on these matters saves a lot of trouble later


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[lottie dolly]

Thanks for that,to put a clearer picture up,a reletive is on disability benefit at present,and has been offered a job that they can/and wants to do,they have been tolled by the person that they will HAVE to go self empoyed,BUT the person offering the job says HE has to deduct the tax/ins,before he gives said reletive the wages,just seems odd to me,the reletive is in the land of,must work,but is struggling on how or who to approach about the change over,i have no idea where to start,we have both done the gurgleing,but nothing has come up that we can desifer into legability,

[Bigmallly]

I would assume as he has to be self employed then he has been sub contracted, would he not have to declare his own earnings & tax, also his disability benefit would most likely be taken into account as he would be deemed fit to work........he needs to get some proper advice from the correct people, maybe CAB is a good place to start.

[rustylady]

Lottie your relative needs some proper advice. My ex-husband was a self-employed subcontractor for several years, and he had to pay his own tax and NI.

Jobcentre should be able to advise.

[lottie dolly]

Thank you very much friends,they will HAVE to get advice from the benefits people direct,they have phoned several times the last week,and none answer the phones,the idea is,to give up the benefit,full stop,there is apparently some sceme that helps such as them back into work,so if things fail the benefit can be got straight onto again,i am trying my best again,as usual,what are we for,

[bearded bloke]

Is this proposed job in the construction industry ?

[Potstubsdustbins]

I am under the impression that a sub-contractor either (a) has to have a tax exemption certificate from the HMCR or (b) the main contractor is obliged to deduct tax and insurance at source. That's certainly how it works in our trade.

CAB will soon clear it up.

Potty

[bearded bloke]

Yep,that's how the old 714 & 715 system worked,which is why I asked if the job was construction related Potty

[bearded bloke]

LD if it is construction industry related then have a look at ...........

HM Revenue & Customs: Subcontractor registration and obligations

[bearded bloke]

If you fancy a lot of reading .......... http://www.hmrc.gov.uk/forms/cis340.pdf ..

The things to watch out for are as a self employed "employee" there is no:

Minimum wage
Statutory sick pay
Holiday pay
Bank holiday pay
ETC

For more info on the differences between "workers" & "employees" rights & benifits see the National Insurance website.

[Bill HH]

If a self employed small man, hires a person,taking Tax & ins out before pay,is it correct that the person taken on,has to register self employed too,any words of wisdom greatly appretiated

If the man hiring the other man is deducting tax and NI, then the other man is not self employed but employed by the the hirer.
If the hirer does not deduct Tax and NI then the person being hired is self employed and must supply an invoice and declare his earnings to the tax man as self employed. They get you one way or another.

[lottie dolly]

Thank you so much BB,and all who replied,all has been noted,and will pass on to the relative,

[Kirk]

Something sounds a bit strange, not saying it is incorrect but strange.
If you are self employed then you pay your Tax and NI, it may be done as a limited company via PAYE or you sort it out at the end of the year via the tax return.

If someone else pays the tax and NI then I would consider that the person is employed as an employee by the main party. As such there may be other commitments that have to be done. The obvious one being the employers NI contribution. There could these days be other things like a pension contribution, holidays and sick pay.

As said the set up seems strange. It would be no problem for your friend to simply fill an invoice and submit that. They are then responsible for their own contributions. So much easier for whoever is wanting to perform the Tax+NI contributions.

The major concern being will this Tax+NI actually get paid over and allocated to the person concerned.

I have work in the contract market for some years and I have always found it safest to do it all myself.

There is one other approach and that is if the person has a Fixed Term Contract with the "employer" in which case they are employed as if a normal employee, the employer takes Tax+NI and the balance is paid as a salary. The difference is that the term of employment is limited. However the person would not then be self employed.

My concern is that payments may get lost and also the tax+NI can be higher then otherwise.

[Potstubsdustbins]

If its the building trade then its doesn't work like that.

The old 714/715 system was introduced some years ago to stop fiddling.

You can be a self employed sub contractor supplying your labour only no materials. In this case you have to have a Certificate from HMCE plus a book of official receipts. That way you can get your payment in full and you give a receipt to the main contractor.

Without The Exemption certificate etc you can submit as many invoice's as you like he will still stop you tax and NI payments supplying you with a receipt.

At the end of the tax year you submit your books along with the receipts the value of which is taken in to account when they decide how much they are going to rob you of.

The main problem for the subcontractor is that the amount the main contractor has to deduct is a flat rate which does not take in to account any items of tax relief the subcontractor may be due to.

Potty