Confused - Self employed paid PAYE

chrismac1

"my friend who is an accountant says I can apply to go Gross total, however he believes I have to have lengthy records for paying tax to do so.
Or maybe I could be unregistered from the CIS, providing my boss is not in the CIS, which when I asked, he said ''well I am and I aint, its tricky''
which confused me, no direct answers...."

Here are some direct answers for you:

1. You have no chance of getting 0% deduction status for at least 3 years. Repeat NO CHANCE. NADA.

2. Being in or out of CIS is not a choice your boss has, it depends on the nature of his business. Clearly he is in the construction sector, clearly he has at least one sub-contractor, namely you. YOU ARE IN THE CIS END OF STORY.

Hopefully these answers are sufficiently direct for your needs.


https://www.gov.uk/what-you-must-do-as-a-cis-subcontractor/gross-payment-status

chrismac1

"Why is it daft for her to suggest I will pay £0 TAX when I am only going to be earning £7,200 total income through the tax year? When I have an allowance of £10,000.
It seems odd you see this as daft when it's rather logical..."

Do not confuse tax and logic, the two things are on different planets. In this case, in fact it is quite logical ONCE YOU ACCEPT the HMRC assumption that all UK construction businesses are out to fiddle the tax system left right and centre.

The 20% deduction system is INTENDED to take too much tax off you. HMRC knows that if you raise an invoice for £1,000 then £200 is way too much tax. As you say, you'll have the £10k tax-free allowance, and you'll have claimable equipment, mileage, telephone and admin. expenses. Based on the quality of your posts, you should have accountancy expenses too if you don't want an enquiry at some stage.

They know all this, they want to take too much tax off you now and then, if necessary, haggle with you after the end of the tax year when you come to claim it back.

Mr.Wrong

Okay I understand,
However as I won't be on enough to have to pay tax, even though they will have a bill for me undoubtably that will then be cancelled as I haven't earnt enough once my SA goes in, I can't have expenses as only those who qualify to pay tax(over the allowance) can claim back on expenses through this.
Not for me sadly, next year I will have earnt enough though to do so, but this year I started work in Aug so not worked long enough to have a large emough income.

Thank you all

Pennywise

Mr.Wrong wrote: »

Okay I understand,
However as I won't be on enough to have to pay tax, even though they will have a bill for me undoubtably that will then be cancelled as I haven't earnt enough once my SA goes in, I can't have expenses as only those who qualify to pay tax(over the allowance) can claim back on expenses through this.
Not for me sadly, next year I will have earnt enough though to do so, but this year I started work in Aug so not worked long enough to have a large emough income.

Thank you all

But what were you doing before August? If you had a job or receiving certain taxable state benefits, you'd have been using up some of your annual £10,000 tax free personal allowance. The clock doesn't start from the day you start your self employment, it's always on a full tax year basis and ALL sources of taxable income need to be added together.

agrinnall

It sounds like that if you don't want to pay tax on an income under your personal allowance then you either need to get employment under PAYE or do properly self employed work - from what you've been told CIS will always lead to you paying tax even though (if operated correctly) you'll get it back eventually.

kendall17

I imagine the bill your boss has is because he has been paying you gross, up until your UTR being issued and hasn't submitted a CIS monthly return with you on it.

He is now submitting a monthly CIS return (the 1st with your name on it) showing that he has paid you £225 per week for the past 17 weeks and that he is required to deduct tax from you (17 x £225 =£3,825 @ 20% = £765)

He has to pay the tax deducted on your total earnings over to HMRC and since he has overpaid you (by not deducting tax) he is requesting you pay him the tax, for him to pay it over to HMRC.

Mr.Wrong

kendall17 wrote: »

I imagine the bill your boss has is because he has been paying you gross, up until your UTR being issued and hasn't submitted a CIS monthly return with you on it.

He is now submitting a monthly CIS return (the 1st with your name on it) showing that he has paid you £225 per week for the past 17 weeks and that he is required to deduct tax from you (17 x £225 =£3,825 @ 20% = £765)

He has to pay the tax deducted on your total earnings over to HMRC and since he has overpaid you (by not deducting tax) he is requesting you pay him the tax, for him to pay it over to HMRC.

Absolutely correct. I have had no jobs up untill Aug, I have a conviction and it stops me from getting any work, no one will trust a stranger with a conviction regardless of everything else.

Yes my boss says his accountant will write up an agreement saying he will deduct an extra £20 per week to pay him off the debt of £600+, as he is paying in full this month. As well as issuing me tax deduction slips and tax payment slips to prove the tax has been paid.
Seems sorted really

chrismac1

Good. I hope it works out for you and gets you back on a good track.

kendall17

Mr.Wrong wrote: »

Absolutely correct. I have had no jobs up untill Aug, I have a conviction and it stops me from getting any work, no one will trust a stranger with a conviction regardless of everything else.

Yes my boss says his accountant will write up an agreement saying he will deduct an extra £20 per week to pay him off the debt of £600+, as he is paying in full this month. As well as issuing me tax deduction slips and tax payment slips to prove the tax has been paid.
Seems sorted really

Very good, seems a fair outcome, glad its sorted.