A bit of sole trader advice
18 August 2011, 01:57 PM
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A bit of sole trader advice
Afternoon All
Been thinking about taking on a young lad at work to work through me as labourer, he is only 17 and those risks aside can anyone explain to me where i stand on the tax side of things?.
Currently I am only registered as a sole trader and not an employer. If i pay the lad properly do i have to pay his 20% tax plus the tax that i pay on the amount i pay him as well?.
I have done a bit of research and from what i can see this is the case. Unless i register as an employer which can take upto a month.
I dont know how long he would work for me so dont want to spend ages getting things set up and then get shafted for it. It just seems very unclear how it works.
Obviously i dont want to take someone on and then find out its costing me more money to actually employ somone as a sole trader.
Any advice greatly appreciated on this confusing subject.
Cheers
Dave
Been thinking about taking on a young lad at work to work through me as labourer, he is only 17 and those risks aside can anyone explain to me where i stand on the tax side of things?.
Currently I am only registered as a sole trader and not an employer. If i pay the lad properly do i have to pay his 20% tax plus the tax that i pay on the amount i pay him as well?.
I have done a bit of research and from what i can see this is the case. Unless i register as an employer which can take upto a month.
I dont know how long he would work for me so dont want to spend ages getting things set up and then get shafted for it. It just seems very unclear how it works.
Obviously i dont want to take someone on and then find out its costing me more money to actually employ somone as a sole trader.
Any advice greatly appreciated on this confusing subject.
Cheers
Dave
18 August 2011, 02:39 PM
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Yes, you will have to pay his Tax and National insurance and the paperwork is a ballache for a one man band. Plus he will be entitled to holidays etc...
Just take him on as a self employed sub-contractor then you don't have to pay contributions / holiday pay etc...
Just take him on as a self employed sub-contractor then you don't have to pay contributions / holiday pay etc...
18 August 2011, 03:12 PM
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Are you in the construction industry?
If so CIS rules will apply and you will still be liable for deducting and paying over income tax to HMRC if he's a self employed sub contractor.
If so CIS rules will apply and you will still be liable for deducting and paying over income tax to HMRC if he's a self employed sub contractor.
18 August 2011, 03:15 PM
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18 August 2011, 06:16 PM
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Unless he's classed as a contractor as opposed to a sub-contractor then no, you can't pay him gross.
You'll have to deduct 20% tax and then pay it over to HMRC each quarterly month.
It's no big deal to do this, however - if HMRC see that he's only being paid by you and no other contractor then they may decide he's actually employed and they can (and will) hit you with employers NIC's (back dated).
Get him registered and get him to set up a Direct Debit for his class 2 NIC's.
You'll need to inform your tax office that you'll be paying sub-contractors and they'll send you the necessary payment book and other stuff.
Also, once you're registered to pay someone else you MUST submit a MONTHLY declaration to HMRC of how much you've paid/deducted from him.
Even if you go a month where no payments have been made you're STILL required to tell HMRC (a nil return).
If you don't do any of the above they WILL try and fine you.
Utter *******s they are.
Good luck!
You'll have to deduct 20% tax and then pay it over to HMRC each quarterly month.
It's no big deal to do this, however - if HMRC see that he's only being paid by you and no other contractor then they may decide he's actually employed and they can (and will) hit you with employers NIC's (back dated).
Get him registered and get him to set up a Direct Debit for his class 2 NIC's.
You'll need to inform your tax office that you'll be paying sub-contractors and they'll send you the necessary payment book and other stuff.
Also, once you're registered to pay someone else you MUST submit a MONTHLY declaration to HMRC of how much you've paid/deducted from him.
Even if you go a month where no payments have been made you're STILL required to tell HMRC (a nil return).
If you don't do any of the above they WILL try and fine you.
Utter *******s they are.
Good luck!
Last edited by zip106; 18 August 2011 at 06:18 PM.
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18 August 2011, 06:34 PM
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Unless he's classed as a contractor as opposed to a sub-contractor then no, you can't pay him gross.
You'll have to deduct 20% tax and then pay it over to HMRC each quarterly month.
It's no big deal to do this, however - if HMRC see that he's only being paid by you and no other contractor then they may decide he's actually employed and they can (and will) hit you with employers NIC's (back dated).
Get him registered and get him to set up a Direct Debit for his class 2 NIC's.
You'll need to inform your tax office that you'll be paying sub-contractors and they'll send you the necessary payment book and other stuff.
Also, once you're registered to pay someone else you MUST submit a MONTHLY declaration to HMRC of how much you've paid/deducted from him.
Even if you go a month where no payments have been made you're STILL required to tell HMRC (a nil return).
If you don't do any of the above they WILL try and fine you.
Utter *******s they are.
Good luck!
You'll have to deduct 20% tax and then pay it over to HMRC each quarterly month.
It's no big deal to do this, however - if HMRC see that he's only being paid by you and no other contractor then they may decide he's actually employed and they can (and will) hit you with employers NIC's (back dated).
Get him registered and get him to set up a Direct Debit for his class 2 NIC's.
You'll need to inform your tax office that you'll be paying sub-contractors and they'll send you the necessary payment book and other stuff.
Also, once you're registered to pay someone else you MUST submit a MONTHLY declaration to HMRC of how much you've paid/deducted from him.
Even if you go a month where no payments have been made you're STILL required to tell HMRC (a nil return).
If you don't do any of the above they WILL try and fine you.
Utter *******s they are.
Good luck!
As Zip says, it's easier than it sounds to do.
As for them deciding you should be employing him... well other than telling them to F off, you could get him to invoice your customers directly to mix it up a bit. So every so often he'll be technically working directly for them, etc. Obviously this might not be feasible depending on the working relationship you are willing to have with him.
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