Sole trader questions

[mattle40]

hi all, didn't know where was best for this thread, please move if needed

I've just set up on my own and registered with the CIS. Am I right in thinking for example that, if say I got a gas fitter in on my job to change a hob in a kitchen, he bills me £100, is he a subby to me and therefore I have to make deductions on what I pay him and pay that directly to HMRC? This sound ridiculous, how widely known is this as I can't see it going down too well
And if it's the other way round and I'm the subby to someone, if I bill £100, they make deductions and pay £80
On my books, do I put the £100 down as income and make a note that £20 has already gone to HMRC? Then deduct this off my end of year tax bill

Thanks all

 

[AliGage]

My reply might be right ir wrong. Don't know but it's what I do.

Gas engineer would invoice me for £100, that's what I pay him. That invoice then goes against my job as an "expense " much like any materials receipts etc.
Total cost of job subtracting any "expenses ", including gas man's invoices = gross profit.
Deduct 20% off this for the tax man.
Anybody I call in on my jobs is responsible for their own tax.

 

[Andy Allen]

Ali is spot on the gas fitter would put your job through his own books and pay the tax that way......providing you get an invoice off him you claim it as an expense against your job.
Another way of doing it is just get the client to pay him direct.

 

[mattle40]

Thanks guys, that's how I thought it should be.
so is he classed as a subby to me or not? The CIS states I should make the deduction to subbys so I'm concerned I'm doing it wrong

 

[AliGage]

I'm presuming this is in a domestic environment?
I wouldn't class your gas engineer as a subcontractor. Unless you were fitting new build kitchens perhaps. For example:
You gain a contract for fitting kitchens in 40 plots. You would sub contract your gas man to undertake necessary work on those 40 kitchens.

But if it's adhoc in a domestic environment then effectively he's just a recommended tradesman you use ad and when. So he invoices you and just pay gross.

The way I see it domestic work doesn't fall within the CIS industry. It's private work.

 

[mattle40]

Thanks Ali that's cleared it up better, I'm new to all this so just want to make sure I'm getting it right from the start.
That's how I've been doing it but something I read on .gov got me spooked
Cheers

 

[AliGage]

No worries.

This is how I've always done it.
If you think about it, each domestic job is a new contract.
Wouldn't be worth messing around and doing all that admin for a one off job, half hours work for your gas man. Let him sort his own tax.
Just make sure you have an invoice from him for what you pay him.

 

[mattle40]

That's exactly what I thought, bad enough doing my own books and tax without doing every other trade I get in too. Cheers

 

[John Benton]

I never pay any of the trades that work in conjunction with me on any of my jobs. They quote the customer and invoice the customer themslves. I don't want to get involved in any more admin than needed to (you don't earn any money for that, unless you are taking a slice of commission for your trouble)

An easy way to do it is to get your gas fitter to give you a cost for say decommissioning and removing a hob, fitting of a hob, decommissioning and removing an oven, fitting of an oven. You can then give the price to the customer within your quote and tell the customer they will be invoiced by the gas fitter. If he has to move any pipework ask him to provide a price per metre for the movement as well.

 

[Andy Allen]

I do the same as John. ...lot less hassle. .....and your not shelling out any money before you get paid...

 

[SJPurdy]

Check that you have appropriate public liability insurance if you are subcontracting or arranging other tradesmen.

 

[mattle40]

Check that you have appropriate public liability insurance if you are subcontracting or arranging other tradesmen.

Thanks, hadn't thought to cover the yet thankyou

 

[Dan]

It's only on commercial sites where you go "cards in" (is that still the term?) that if you're subbing work out, the tax gets a bit different.

Might be worth speaking to a local accountant, who can do your self assessments come tax time (and save you quite a bit of cash with being a new business, even a % of your laundry bills for cleaning work clothes, and % of your electric and gas bills at home if you're using a room as an office to do quote work in etc can go through as expenses).