Paying subcontractors

Status
Not open for further replies.
spunky

spunky

Private Member
Without getting gross payment status Is there any way I can pay subcontractors if I'm cis registered and already having tax deducted ?
 
Thats an easy one Spunk what you do is take a big job on, employ loads of donoughts and unfortunately a couple of good lads put them all on monthly, 30 days invoice s**t then hang it out another couple of weeks then disapear,then you dont have to pay any tax
 
Yes. Just make sure you are making at least 20% on the blokes or you'll be wasting your time. That way you won't be out of pocket, and your tax rebate will be a nice one. It's an impossible one if the blokes are on daywork. They'll need to be producing £150 worth of work for you to pay them £120 a day.
 
Rich do you mean pay them gross but what if there not entitled to gross payment and is that what you mean Tony You'll be 20% out of pocket till you get the tax back?
 
In effect Spunky, you are paying the gross amount either way. If they are Gross, then for example, it's £150 a day. If they are paid net, then it's £120 to them and £30 to the tax man at the end of the month. Could you afford to give away 20% of your earnings and wait till next year to get it back? I know I couldn't. Another option is to get the client to pay thm direct, but then there is no room for a bit of profit for you on top. When I had a few tapers on, if I was getting say a grand to tape a property, i'd pay the blokes £700. £200 tax to pay and something for me for finding the work and taking the risk. At the end of the year i'd have a nice big rebate for my troubles. Like Lucius says though, it's not that easy nowadays. I try to avoid using subbies now and just work more hours myself. Why give it away?
 
So even though the work I'd be booking in would be paid to me nett I would still have to pay the people I'd be payings tax so the tax is being paid twice and I have to wait till next year for the rebate?
 
spunky said:
So even though the work I'd be booking in would be paid to me nett I would still have to pay the people I'd be payings tax so the tax is being paid twice and I have to wait till next year for the rebate?
Click to expand...
Yes. It's a cnuts game.
 
Is it fairly easy to set up Tony ......and do you think along as you passed the criteria you'd be better getting paid gross
 
That is exactly right mate,you need a good bottom line,( money in bank) as your rebate will always be paid over 3 to 4 months after your end of year.If theres nothing in it for you.would,nt bother
 
forget the money for the min, are there many lads that do this or are the majority of people bar subcontractors getting paid gross?
 
Personally we have a gross payment status, but before we had that, we operated in such a manner. I have guys on the cards , which makes things slightly easier on the cashflow as you can offset the paye tax and NI against the CIS suufered by the firm.Some of the subbies I use get us to pay thenm and their labs seperately.
 
For a definative answer You should consult your accountant.You may be able to offset CIS suffered against CIS deducted from subbies when you make your monthly return. I beleive you will only be eligble to carry out offsetting if you are a registered limited company. Hope that helps.
 
Last edited:
Ive not done this but a mate of mine done it, he got a job and couldnt pay me cash on this one so took my cis number registered online with the tax office i presumed and just paid my tax straight away, He gave me a receipt.

If your getting 150 a day for some one and paying them 100 less tax 80 i dont see how having to pay the tax out of the hundred and making 50 is difficult. If you want to make 50 all the time and your only getting 130 a day for some one you will have to pay them less so i dont see how the tax makes any odds.
 
its a nightmare all that mallarkey-your paying out wages before youve been paid+the tax man with the yellow book every month+employers liability insurance(although theyre subbies youve still got to have them covered)-only time you see the benefit is when you get rid of em and get your final payment in from whoever your working for
 
spunk i used to do it, but its a chore. get urself gross payment status, u need to turn over 30k i think. then its a lot easier and helps a lot with cashflow. i duno if ur all site work, but if u get bits on the side, i used to get cheques written out to the other guys, or a bit or cash here and there. saves a lot of time on paperwork. there are ways around it as long as its not full time
 
Status
Not open for further replies.

Share this page

Back
Top