[Finance] OT Tax question

[crookie]

I'm sure there must be some tax experts on here, so I'm hoping they could help me out. I'm self-employed with a few businesses so obviously my accountant does my tax return every year and I'm told how much I owe in Tax/NI, and pay it.

My daughters OH, they are quite young and naive, has recently changed jobs, working on the roads for a utility company. He says he is self-employed, but I recently found out he is having income tax deducted at source. Surely this can't be right ? You are either employed, pay tax as PAYE and enjoy the benefits of being an employee, or you are self-employed, get paid all your income, and have to submit a tax return, and pay your tax/NI that is due. He queried this on my advice and they have told him he will have to sort out his NI in January. This all sounds very dodgy to me. He is a bit reluctant to confront them as it is a family member who got him the job. Is it normal/legal to deduct income tax at source for someone who is 'self-employed' ? If he has to do a tax return in January, will HMRC be able to link his tax already deducted to his NI number ? Any advice gratefully received.

 

[drew]

I'm sure there must be some tax experts on here, so I'm hoping they could help me out. I'm self-employed with a few businesses so obviously my accountant does my tax return every year and I'm told how much I owe in Tax/NI, and pay it.

My daughters OH, they are quite young and naive, has recently changed jobs, working on the roads for a utility company. He says he is self-employed, but I recently found out he is having income tax deducted at source. Surely this can't be right ? You are either employed, pay tax as PAYE and enjoy the benefits of being an employee, or you are self-employed, get paid all your income, and have to submit a tax return, and pay your tax/NI that is due. He queried this on my advice and they have told him he will have to sort out his NI in January. This all sounds very dodgy to me. He is a bit reluctant to confront them as it is a family member who got him the job. Is it normal/legal to deduct income tax at source for someone who is 'self-employed' ? If he has to do a tax return in January, will HMRC be able to link his tax already deducted to his NI number ? Any advice gratefully received.

If he has recently changed jobs (ie after April this year) and is now required to do a tax return, that will be for the current financial year which finishes next April and, currently, he wouldn't need to do an online tax return until 31st Jan 2020 (paper return I think must be filed by the end of Oct 2019).

His NI number is unique so as long as his employers are deducting against that I would have thought HMRC can easily match it up. Presumably he gets a pay slip so that should show what tax/NI he is paying?

Edit: I'm not a tax expert but do file my annual return every January.

 

[crookie]

If he has recently changed jobs (ie after April this year) and is now required to do a tax return, that will be for the current financial year which finishes next April and, currently, he wouldn't need to do an online tax return until 31st Jan 2020 (paper return I think must be filed by the end of Oct 2019).

His NI number is unique so as long as his employers are deducting against that I would have thought HMRC can easily match it up. Presumably he gets a pay slip so that should show what tax/NI he is paying?

Edit: I'm not a tax expert but do file my annual return every January.

Thanks yes, of course, getting ahead of myself with his tax return !! I'm sure they can link it, but I don't think he has been getting regular payslips which is another concern

 

[Official Old Man]

Not an expert but self employed myself. My instant reaction would be no, he should be paid in full. But as he isn't, he needs to get full payslips showing what tax has been paid. Presuming he works for a reputable company then his pay slip should show tax paid. He can then contact HMRC (have coffee and toast ready for long wait) and check that this tax or pay slip is legit. His employer will have their tax reference on the payslip. Mine is three numbers, slash, two letters and more numbers. Any payroll would deduct not only tax but NI and pension.
The next legal bit of course is whether he can claim holiday pay (re- Uber and other delivery drivers).
Other thoughts are whether he is even self employed if he has only one job and that is working full time for an employee.

 

[crookie]

Not an expert but self employed myself. My instant reaction would be no, he should be paid in full. But as he isn't, he needs to get full payslips showing what tax has been paid. Presuming he works for a reputable company then his pay slip should show tax paid. He can then contact HMRC (have coffee and toast ready for long wait) and check that this tax or pay slip is legit. His employer will have their tax reference on the payslip. Mine is three numbers, slash, two letters and more numbers. Any payroll would deduct not only tax but NI and pension.
The next legal bit of course is whether he can claim holiday pay (re- Uber and other delivery drivers).
Other thoughts are whether he is even self employed if he has only one job and that is working full time for an employee.

Yes these were my thoughts as well. Seems they are taking the p**s. And the lack of regular payslips is a big concern, as there is defintely something dodgy about this. If the guy he works with doesn't work, he doesn't and then doesn't get paid.

 

[Official Old Man]

I'd get on the dog and bone Monday armed with both his and his employees tax numbers. If the employees tax number is correct then the pay slip, as long as it's not on a scrap of paper, is proof enough that tax has been paid. If the employer doesn't pay HMRC that is not the fault of the employee.

 

[crookie]

I'd get on the dog and bone Monday armed with both his and his employees tax numbers. If the employees tax number is correct then the pay slip, as long as it's not on a scrap of paper, is proof enough that tax has been paid. If the employer doesn't pay HMRC that is not the fault of the employee.

Yes I'll get him to do that tomorrow, thanks for the advice

 

[schmunk]

My immediate thought is that the deductions relate to the Construction Industry Scheme. Have a quick read up on it before going ballistic at his 'employer'.

 

[Spearritt of the Albion]

My immediate thought is that the deductions relate to the Construction Industry Scheme. Have a quick read up on it before going ballistic at his 'employer'.

I was just typing something along the same lines. The Construction Industry Scheme (CIS) was introduced to make sure that HMRC weren't losing millions of pounds in unpaid taxes. Basically if you were a self employed builder doing one job for one employer it was deemed that you were in their employment and PAYE was due. NI contributions were also deducted at source and employers NI contributions were due. If you were a builder doing several jobs for different companies then it was deemed that you were self-employed and Tax and NI was due after completion of your tax return. I don't think this is unique to the construction industry but CIS was introduced because employers were getting away with their NI contributions and many employees were not declaring their full income. In many cases employees were being forced by their employers to declare themselves as self employed so that the employer didn't have to pay Employer Contributions.

 

[sams dad]

As others have said, it sounds like he is working under the CIS scheme. He will have 20% of his gross pay stopped every week/ month, and he should be given a monthly statement showing total gross pay and total tax deduction for that month. He must ensure that he gets these statements as they are essential for completing a self assessment tax return, when he will be able to claim back any overpaid income tax, after deductions have been made for NI contributions.