So ive been a sole trader carpenter0 for over 10 years or so now, just working for other people. But lately ( the last 10 months ish) I've been getting bigger and bigger jobs that have required me to get other various labour in under my name so to speak ( plumber, electrician etc)
Basically they have invoiced me and then ive paid them out of the money that I have been paid from the job. A few of theses jobs have already had the tax deducted before I get paid, so have I done the wrong thing by paying my "subbies" their full invoice amount or should I have deducted their tax too?
Im a bit concerned after talking to some one today that i might be paying theirs and my tax when i shouldn't be if that makes sense!
Any accountants or tax people on here that know what im talking about??
You should be operating CIS too.
AFAIK if you are a sole trader you shouldn't be getting taxed for any income as you do your own tax at the end of the year. People you hire to do work should be paid depending on wither they are sole traders or not. If they are sole traders then you don't have to pay any tax if you have taken on a permenant or even a zero hours employee then you should be sorting out the tax/NI but even then you can pay them as a sole trader if they ask.
When I used to do photography I was hired as freelance so they just paied me monies and I sorted my tax out with self assesment. anyone I asked to help I gave them cash and they would sort out any tax issues themselves.
Assuming you are VAT registered why are you getting paid tax deducted. It's your job to pay HMRC this tax not your clients to deduct it from their payment.
You should be paying all you subbies according to their invoice - which may or may not include VAT according to their status.
Jim, have a read of the [url= http://www.hmrc.gov.uk/cis/ ]HMRC CIS Guidance[/url]
The tax shouldn't be deducted before you get paid. You get paid in full, pay your subbies and suppliers in full. You then pay income tax on any profits and sort out the vat.
Edit. Not familiar with CIS as that's not my industry so ignore me if you are in that.
Jim is a carpenter working in construction. Construction Industry Scheme dictates that he will have tax deducted at 20 or 30% (if not registered) on his net labour charges by the contractor who pays it over to HMRC. Jim should be deducting tax off his subbies and paying that over to HMRC.
Jim and his subbies get to reduce the tax deducted from there total tax liability when they submit their tax returns. If they have had more tax deducted than the liability they will get a refund.
You can get gross status CIS but you would need a high turnover as well as other criteria that a sole trader is unlikely to meet as you would have gone limited in those conditions.