Subcontractor AND employee, tax help? CIS

alm721

Hi folks, am after some advice. My brother in law works as an employee for a company, part time. He also does some work for another company as a sub-contractor.
As such he is getting stopped 20% tax a source by the second company under cis rules. However, HMrc have classed his employment with company 1 as a second job and are therefore taking him on a BR code at 20% on the employment part.

Basically then he's not getting any tax free part of his wages, everything is getting taxed at 20%. I know that for his job he should get a tax free allowance *basic 747l code) But does he get the same for the subcontracting?

To put it another way. If you were subcontracting all the time with nothing else. Would you pay 20% on everything or do you still have a personal tax code?

Thanks

alm721

Hi folks, am after some advice. My brother in law works as an employee for a company, part time. He also does some work for another company as a sub-contractor.
As such he is getting stopped 20% tax a source by the second company under cis rules. However, HMrc have classed his employment with company 1 as a second job and are therefore taking him on a BR code at 20% on the employment part.

Basically then he's not getting any tax free part of his wages, everything is getting taxed at 20%. I know that for his job he should get a tax free allowance *basic 747l code) But does he get the same for the subcontracting?

To put it another way. If you were subcontracting all the time with nothing else. Would you pay 20% on everything or do you still have a personal tax code?

Thanks

LittleVoice

alm721 wrote: »

Hi folks, am after some advice. My brother in law works as an employee for a company, part time. He also does some work for another company as a sub-contractor.
As such he is getting stopped 20% tax a source by the second company under cis rules. However, HMrc have classed his employment with company 1 as a second job and are therefore taking him on a BR code at 20% on the employment part.

Basically then he's not getting any tax free part of his wages, everything is getting taxed at 20%. I know that for his job he should get a tax free allowance *basic 747l code) But does he get the same for the subcontracting?

To put it another way. If you were subcontracting all the time with nothing else. Would you pay 20% on everything or do you still have a personal tax code?

Thanks

He should ask HMRC to classify the part-time PAYE job as a job through which to allocate the full personal allowance. That works if he earns that much in his part-time job. If his income would mean that he is due to pay 40% on any of it, then I understand the code would be adjusted.

BoGoF

Yes, people working under the CIS scheme have 20% (sometimes 30%) tax deducted at source even if that is your only income. You are still entitled to the tax free allowance of £7475 which is given when you complete your Tax Return.

alm721

Thank-you both. I've advised him to ring hmrc and class his employment as his main job. I didn't know you could still get the tax free bit if you just subcontracted though. Presumably, you'd get a rebate at the end of the tax year.