sub contracting + tax help please for 18 year old

dawn1

my son aged 18 has been offered a job, laying slabs and genaral labouring, he has been told that he has to go to the tax office and fill in a hm revenue + customs registrataion form , i think it is called a CIS ? as he will be sub contracting , does this mean he will have to pay his own tax and national insurance, he all ready has a part time job which he wants to keep , in the year 2005/2006 he earnt £3549 , this job will pay him £250 a week , if he has to pay his own contributions how much will it be , can anybody help or point me in the direction of a site that can, thank you

linlin_3

You should find some mention of the CIS scheme on the HMRC website. Basically, until he has a proven track record of submitting accounts as a subcontractor, he will have some tax deducted at source - around 18%.
At the end of the tax year, it's important he completes a tax return will all gross earnings and tax deducted - he'll most likely then get a refund.

dawn1

thank you linlin i will have a look on the site , when you say tax deducted at source , does that mean by his employer ? i was told that the tax would be 33% of his wage , sorry for all the questions

linlin_3

dawn1 wrote:

thank you linlin i will have a look on the site , when you say tax deducted at source , does that mean by his employer ? i was told that the tax would be 33% of his wage , sorry for all the questions

It's been a couple of years since I dealt with CIS, but I'm sure the rate then was 18% so I'd be surprised if it's very much higher than that.

Yes, the tax will be deducted from his wage and he'll get a certificate to that effect. He must keep all these certificates, together with receipts for all allowable expenses (he's effectively self-employed). At the end of the tax year, he'll get a P60 from his PAYE job showing total earnings and tax for that year. Those figures AND those earnings from subcontracting (gross), go on his tax return, which will also need the figures for tax deducted. If he has problems filling in the tax return, he should go to the local revenue offices and ask a kindly inspector to help him complete the form..........they are only public servants!!!

dawn1

linlin thank you so much for your help , you have make thing a lot clearer