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TonyTax
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15946
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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I am registered as a sole trader in construction. I have

Customer Question

Hi I am registered as a sole trader in construction. I have recently supplied more labour as subcontractors, I charge them out at say £20 per hour and pay them £17, but my client takes 20% off me at source how can I overcome the shortfall in monies in?
Submitted: 1 year ago.
Category: Tax
Expert:  TonyTax replied 1 year ago.
Hi. You need to decide whether you are charging your main contractor enough for supplying subcontractors to him first of all, given what you are paying them. You should be deducting tax at 20% from your subcontractors payments which you pay over to HMRC via your monthly return. There is information here on the Construction Industry Scheme: https://www.gov.uk/topic/business-tax/construction-industry-scheme In order not to have tax deducted from payments made to you, you can apply for gross status but the qualifying criteria are tight. Read about them here: https://www.gov.uk/what-you-must-do-as-a-cis-subcontractor/gross-payment-status Alternatively, trade through a limited company and that way you can offset the tax deductions you suffer against the tax deductions you make from your subcontractors and pay over the difference if the deductions you make are larger than those you suffer. See paragraph 1.15 here: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/448756/CIS340_06_15_V1_0.pdf I hope this helps but let me know if you have any further questions.