Sorry, managed to put this in the bike section and can’t move it 🙁

im a self employed floor layer

I work with my brother in law also a floor layer, he pays me once he’s invoiced the contractor we’ve done work for and he’s been paid.

Most of these contractors take off 20% through CIS tax scheme.
So say I get £70 for a day, he pays me £56 and I pop in the diary that I’ve been paid £56 but paid £14 tax, so when my tax return comes round I can put this in. However im thinking this isn’t right

My question is, will the tax taken off my brother in laws invoice count as tax paid on my wages? Or will I go to do my tax return and it’ll flag up not right?
I did all my own invoices last year as we worked for one contractor, however this year has been work for several different people, all my brother in laws contacts, and he gets paid then pays me as above

I’m thinking that because it’s done through CIS all the tax paid will be registered to his UTR number and it won’t count as tax paid by myself, thus meaning that I am only earning £56 a day (using the above example) not £70 that was the original amount
And also leaving me liable to pay any tax at the end of the year that I may owe, or on the flip side will mean I’ve paid no tax and can’t get a rebate if owed

Would it be easier for me to just go back to sending the contractor my own invoices so the CIS tax goes through my UTR?

Help me please (:

He fills in the paperwork (online now I think) and gives them your UTR No.
He should also be paying that tax to HMRC. IIRC, if he doesnt pay it, you will be liable for it, even though you have had it deducted.
He should be giving you a record of the tax you have paid.

If I understand you correctly, he has been giving one invoice with his UTR details, then paying you your pay, minus the 20% tax, but then not declaring that to the IR/HMRC.
That will not work, either for you, or him. You wont be paying tax, and he is committing fraud by taking tax off you and not paying it to HMRC.

You need to clarify a little more as to what the pay arrangements are.

Your basically getting payed ‘cash in hand’ so to speak .
Even if you work for one contractor per week YOU need to use your UTR .

Thanks for the info

I’ll use an example

£1000 invoice split 60/40 in his favour

I am to be paid £400, him £600

He invoices £1000 to the contractor, they pay him £800 after taking off the 20%CIS

He then pays me £320 (£400 minus 20%tax)
Leaving him with £480. (£600 minis 20%tax)
And that’s that. He either pays me bank transfer or cash, no documentation

From what I can work out, this arrangement means that I’m actually not paying any tax, and would be liable for any amount of tax due at the end of the tax year. It also means I’m earning 20% less than I should be

Yes, as I wrote above, you will be liable for the tax on what you have paid, he is taking a cut of your pay and not declaring it – he should be taking a further 20% off of what he owes you.

e.g. invoice for both of you – 1000, you want 500.
He receives 800 from the main contractor, you want 400 after the tax has been deducted.
He then pays the £100 to HMRC within the month, and gives you a receipt for that.
So, he is only actually receiving £300 – given 800 total, you get 400, HMRC take a further 100, leaving him with £300.
It does equal out over the year, so he doesnt actually lose that money, but more paperwork involved.

You would both be better off (in the short term for him, longer term for you) being paid separately by the main contractor.
Both of your tax affairs would be in order then.

Thanks guys, separate invoices is the way forward 🙂