CIS is breaking me

ceredigion

Basically I`m a self employed tradesman and would normally look after my own contracts, so not an issue. However just taken on a lot of sub contracting work and the figures go like 1k per week for me and my boy. Stopped 20% . £800 . Pay the boy and his associated costs £400. Leaves me £400 minus incidental costs of running my business , brings me down to less than £300 per week. Cant sustain that , the boy is earning more than me. I know I'll get it all back next tax return but no good to pay the mortgage now. Is there any way round this?

zygurat789

ceredigion wrote: »

Basically I`m a self employed tradesman and would normally look after my own contracts, so not an issue. However just taken on a lot of sub contracting work and the figures go like 1k per week for me and my boy. Stopped 20% . £800 . Pay the boy and his associated costs £400. Leaves me £400 minus incidental costs of running my business , brings me down to less than £300 per week. Cant sustain that , the boy is earning more than me. I know I'll get it all back next tax return but no good to pay the mortgage now. Is there any way round this?

You are suffering a 20% deduction on labour costs in 2014/15 you can use this to reduce your payments on account made on 31 January 2014 and 31 July 2014 and any surplus can be applied to your PAYE bill.
Any further surplus will be refunded when you put your tax return in.

kris0211

I am a Chartered accountant and often see this problem. I suggest that you set up a limited company and as a limited company you can request a refund from HMRC on a monthly basis. It can also be more tax efficient to operate as a limited company. It is a bit more time consuming and I would advise you getting an accountant involved so they can assist you