subcontractor (construction)

p1an0player

Hi, I'm helping a friend do their self-assessment tax return. He works on a building site and thinks he is a subcontractor.

I've been reading the HMRC site and it seems "subcontractor" has a special meaning which I don't quite understand.

He has been getting payslips with PAYE income tax deducted, but no mention of NI or NI number.

Should he be filling in the self-employed or the employed parts of the tax return?

Thanks

RayWolfe

A subcontractor in the building trade has to register as a sub contractor with the tax man. He then gets a subcontractors certificate (card) from HMR&C which he presents to the contractor.
I would guess he is being treated as an employee as he has not presented his cert. Why NI has not been deducted, I cannot imagine.
Take a look on HMR&C web site for further information.

Bean_Counter

p1an0player wrote: »

He has been getting payslips with PAYE income tax deducted, but no mention of NI or NI number

I presume that he is having tax deducted at 20% on the payslip? If so then the employer is treating him as self-employed.

However this does not mean that he is self-employed, and the employer may well be in trouble if HMRC comes along and decides that he should have been an employee as they would face a large tax bill for PAYE that hadn't been deducted, along with interest and penalties.

The employer will be treating him as self-employed to cut down on their own costs, as there will be no employer national insurance, holiday pay, sick pay etc to pay.

Does the payslip show your friend's 10 digit unique tax reference number? I presume is registered as self-employed with HMRC.

p1an0player

Thanks for your answers. He has got a contractors card but he doesn't think his "employer" has ever seen it, nor does the "employer" have the NI number.

My friend is registered as self-employed with HMRC, this dates back to a previous job.

The payslip doesn't show any tax reference number or NI number, and the tax deducted on each payslip is always 20%

mrsthrifty_2

basic NI contributions are payable and billed on a quarterly basis approx £29.90 at the moment, sorry for the approx dont have the latest bill to hand.

is your friend not receiving these bills ?

any other NI due is calculated in and along with any tax due from your submitted self assessment

card or no card the contracter will have to have verified your friend to be deducting the 20% if he is unverified he should be paying 30%

cards were done away with April 07 but cards in existance are ok as long as they have been verified with HMIR by the contracter that the subbie's details are registered with construction list and can be 20% deducted and not 30%

a verification code is given to the contracter to confirm which % to charge and is used on all monthly returns sent in and tax paid by the contracter which has been deducted