sole trader 'employing' occasional help

Clarew_3

My daughter is a sole trader (sign painter) and hoping to get a largish job for which she may need help/ an extra pair of hands. Am I right in thinking that if she uses somebody who is also registered as self employed as a sole trader with HMRC, they can invoice her and she can pay them, keep a record of their name and address and declare it as an expense? The other person would then declare the earnings in their own self assessment form and therefore be responsible for paying their own tax & NI? She would probably need help for 1-2 weeks at the most for this particular job. It has nearly cropped up before at busy times, so would be good to know what the situation is as it will probably crop up again. Thanks!

HappyMJ

Clarew wrote: »

My daughter is a sole trader (sign painter) and hoping to get a largish job for which she may need help/ an extra pair of hands. Am I right in thinking that if she uses somebody who is also registered as self employed as a sole trader with HMRC, they can invoice her and she can pay them, keep a record of their name and address and declare it as an expense? The other person would then declare the earnings in their own self assessment form and therefore be responsible for paying their own tax & NI? She would probably need help for 1-2 weeks at the most for this particular job. It has nearly cropped up before at busy times, so would be good to know what the situation is as it will probably crop up again. Thanks!

If she employs someone then she has to pay tax and NI for her employees through PAYE. It's not that hard.

Clarew_3

But the person she has in mind is self employed so isn't PAYE at the moment... my accountant has told me as I run a holiday home that if I was to have to occasionally pay a cleaner when I am on holiday and unable to do it myself that as long as they are registered as self employed they can invoice me. I was hoping that may also be the case in my daughters situation....

hunnie

Hello Clarew,
I am also unsure of this - despite what HappyMJ says-
My daughter is self employed and gets occasional work from our local council to take classes/put on demonstrations at fairs.
She has to invoice them and they pay her.
They don't consider her as an employee.

pelirocco

They can use the services of a sub contractor who is registered as self employed , and then pay them on receipt of an invoice .

pelirocco

HappyMJ wrote: »

If she employs someone then she has to pay tax and NI for her employees through PAYE. It's not that hard.

You can employ the services of another company , its not the same as employing an individual , as long as they satisfy the regulations of self employed status ( as required by HMRC )

Clarew_3

pelirocco wrote: »

You can employ the services of another company , its not the same as employing an individual , as long as they satisfy the regulations of self employed status ( as required by HMRC )

Thanks for your help. When you say you can employ the services of another 'company' does this include a sole trader/ self employed individual as registered being self employed with HMRC? So it would be a sole trader (daughter) employing the services of another sole trader who would invoice daughter, (who could then claim it as an expense)... just clarifying!

Pennywise

Being registered as self employed doesn't mean that they're self employed when working for you. It's the nature of the working relationship that matters, not what they are registered for elsewhere.

Basically, if the work done in this case is more akin to employment, i.e. you control and direct them (they do what you say), use your equipment, etc., then you need to pay them as an employee.

If the work they do for you is as "a business" i.e. they use their own equipment, aren't directly controlled & supervised by you, etc., then you can pay them as self employed.

Have a look at HMRC's guidance:-

https://www.gov.uk/guidance/employment-status-indicator

It's quite possible, and often common, that someone is self employed for some of their work and an employee for others.

In the OP's case, if they engage the help of another sign-writer who is self employed as a sign writer, then probably OK for them to invoice and be paid as self employed as they'll probably bring their own equipment and work with minimal control & supervision. However, if the other person is, say, a dog-walker or gardner or florist, then they'll almost certainly be using the OPs equipment and will need extensive control and direction, so they'll almost certainly be employed rather than self employed for this work.

pelirocco

Pennywise wrote: »

Being registered as self employed doesn't mean that they're self employed when working for you. It's the nature of the working relationship that matters, not what they are registered for elsewhere.

Basically, if the work done in this case is more akin to employment, i.e. you control and direct them (they do what you say), use your equipment, etc., then you need to pay them as an employee.

If the work they do for you is as "a business" i.e. they use their own equipment, aren't directly controlled & supervised by you, etc., then you can pay them as self employed.

Have a look at HMRC's guidance:-

https://www.gov.uk/guidance/employment-status-indicator

It's quite possible, and often common, that someone is self employed for some of their work and an employee for others.

In the OP's case, if they engage the help of another sign-writer who is self employed as a sign writer, then probably OK for them to invoice and be paid as self employed as they'll probably bring their own equipment and work with minimal control & supervision. However, if the other person is, say, a dog-walker or gardner or florist, then they'll almost certainly be using the OPs equipment and will need extensive control and direction, so they'll almost certainly be employed rather than self employed for this work.

Its an incredibly grey area with HMRC , as you said to be classed as self employed , with the freedom to chose where and when to work ( which is a slightly daft rule ) and provide your own tools . Thats why many people work under umbrella companies or set up their own ltd companys