charlenebb Registered Posts: 40 Regular contributor ⭐ 😼 ⭐
Hi Everyone hope someone can answer my questions.

I have had a self employed ask me to do his payroll for him. There is only him of course. I live in the Croydon, Surrey area any ideas what you would charge for this.

He also said that the accountant he used would submit his returns and end up paying him a tax rebate. How does this work correct me if I am wrong how would he end up with a tax rebate. The only thing I can think of is that he would of offset expenses (or pension contributions) that are tax free against his income at the end of the year (or monthly) and then he would be owed a tax refund from inland revenue. Would someone please comfirm this.

Also before I take on any of his work should I get him to sign anything e.g conditions of our contract?. I have not done this before. I am now registered as an aat member in practice and have indemnity cover.

Any advice would help on the three questions above.



  • Bluewednesday
    Bluewednesday Registered Posts: 1,624
    Is he a subcontractor under the CIS scheme?
  • Bluewednesday
    Bluewednesday Registered Posts: 1,624
    If it is only him and he is self employed - how are you going to do his payroll? Is he running as a limited company?
  • charlenebb
    charlenebb Registered Posts: 40 Regular contributor ⭐ 😼 ⭐

    He is self employed and not limited. Sorry I do not know if he is CIS. How does CIS work not that formailia with this.

    I do use payroll for a limited company but have not dealt with CIS before. Could anyone explain this. Is it best to get advice for CIS from inland revenue?

  • A-Vic
    A-Vic Registered Posts: 6,970

    This is a good link from HMRC for self employed

    Or if Subcontractor try

    Is this person registered yet?

    try them links above and if all else fails ring the Revenue there really good but do perist on ringing them as the phones lines are manic at the moment with PAYE enquiries

    Good Luck
  • deanshepherd
    deanshepherd Registered Posts: 1,809
    I know I'm going to get flamed for saying this but..

    ..are you sure you want to be advising your client about this when you are not entirely sure yourself?
  • Bluewednesday
    Bluewednesday Registered Posts: 1,624
    No Dean you are not going to be flamed for saying it.

    I don't mean to be harsh but what does your AAT practising certificate cover you for? I suspect it is VAT and payroll etc but what you are going to be looking at is personal tax.

    You cannot advise your client until you have experience in this area - I'm fairly sure that this is what your certificate says.

    You may get more confidence in CIS if you can attend some CPD in this area, Inland Revenue often do free courses on this which you can find useful
  • charlenebb
    charlenebb Registered Posts: 40 Regular contributor ⭐ 😼 ⭐
    My lience does cover me for the following under Taxation
    Personal Income Tax
    Corporation Tax

    As I said I already do payroll for a director under a limited company. As stated in my first question I wanted to know how a self employed would end up with a tax rebate if he is taked on all his income (as self employed). The only way he would get a tax rebate is if he was claiming back on expenses that are tax free? I only wanted someone to confirm this. Also as I said I have not worked in any of the CIS before. I am sure the AAT would not have given me a lience if they thought I could not do payroll since I am already doing this.
  • payrollpro
    payrollpro Registered, FMAAT Posts: 427 Dedicated contributor 🌟 🐵 🌟

    Looks like your going to regret posting this.

    Leaving aside the MIP and licence issues I think I have to agree that something does not add up here. Clearly if he is a sole trader and has no employees there is no payroll as such and if he insists on it he will end up paying you to run the information through a payroll system (and no I dont know what you would charge but it wouldnt be a lot) and then again when you run the same data through the personal tax computation. This seems odd, and I agree with you that there is something funny about the regular tax refund thing as well.

    One thing which does occur to me is that perhaps he wants the payroll calcuation regularly because he wants to keep the right sums available to pay his tax when it finally becomes due, though perhaps someone needs to explain that this wouldnt be quite right either.

    My logic though suggests that his previous adviser was running his income via a payroll and then doing a final self assessment return which would bring in the expenses allowed and thereby generate a refund every time when the payments made through the payroll are taken into account. For me this is the only scenario that fits your information.

    I cannot see it being a CIS matter because someone else would be doing the tax withold and he would not need a payroll to sort it out.

    Perhaps you could run a bit more detail past me and I will help you work it out.

  • Poodle
    Poodle Registered Posts: 711

    He may be a contractor as well as a subcontractor where he has CIS deductions made on his invoices and stops CIS from his subcontractors. He might well think that he operates payroll as he would have been sent a P30BC Employer Payslip Booklet.

    Contractors must pay over any deductions to HMR&C where they are held on account of their tax of class 4 NI contributions bill for the year.

    HMR&C will repay where the deductions are more than what is owed or ask for a payment where deductions are not enough.

    If an accounting period ends early in the tax year then the contractor may ask for an in-year repayment if he thinks that deductions already taken from payment will exceed his tax and NI bill.

    If an in-year repayment is required then I suggested that you contact the CIS Helpline for guidance and an application form. CIS40 for a sole trader.

    In-year repayments are not available for companies who offset through PAYE.

    I suggest also that you get hold of a contractor pack from HMR&C and study it, in particular CIS340 Guide to the construction Industry Scheme. The CIS help line is very good and if you are an MIP then you will also have access to the MIP support line that I find invaluable.

    You also need to send a 'Letter of engagement to this clint before yo start to work for him. Samples are available on the MIP toolkit.

  • charlenebb
    charlenebb Registered Posts: 40 Regular contributor ⭐ 😼 ⭐
    Thank you for your advise.

    This person is not CIS and I did think it abit strange why he wanted me to run a payroll when he would just do this on a self assestment form once a year. I did not agree to do his payroll (This is what he has asked me to do) as I said I would get back to him. He said that his accountant charges him £350. If a tax rebate is taken the accountant deducts his fees from this and then pays him back a difference. All sounds odd to me as I thought most people who worked as self employed submitted a self assestment form at the end of the year and payed any tax etc due to inland revenue (or paid it monthly, quarterly etc). Cannot believe he is paying this as he said he gives all his invoices and expenses to the accountant and he does the rest.

    He is deffently self employed and not ltd. The reason he said he wanted to change is because the accountant is charging to much. I dont know why he just does not do it himself. I know I need to make a living but cannot understand why he has an accountant doing this for him. His yearly income is £36K and this is why I came on here to get some advice before I agree with anything. Thanks alot for your advise especilly Payrollpro A-vic :thumbup1:and Poodle.
  • deanshepherd
    deanshepherd Registered Posts: 1,809
    My guess would be that his income has been declining and he has therefore been getting refunds of payments on account. The accountant has used this to offset his fees - no problem there.

    Perhaps the client is confusing his terminology and, rather than operating a payroll, he does actually mean doing his tax return.

    If a client came to me looking for a new accountant because £350 was expensive then I would send them elsewhere.
  • Bluewednesday
    Bluewednesday Registered Posts: 1,624
    It's definitely all a bit unusual, which is why we've all suggested ltd co and CIS as a reason for refunds. It does sound like the client doesn't know quite what he needs and the correct terminology (which is not unusual).

    I wasn't suggesting that you shouldn't be licensed for payroll as you obviously have experience in that area.

    If you take the job on, let us know what the final outcome is (just out of interest), it would be good to know what he actually meant i.e. personal tax return or payroll as payrollpro has said.
  • charlenebb
    charlenebb Registered Posts: 40 Regular contributor ⭐ 😼 ⭐
    Thank you all so much for your help. I am going to look at what he would like me to do before I make a decision. I think he is not sure what it is he really wants. I will keep you informed as of the outcome. If I am not sure about the CIS I will just not take it on untill I have some training in this area.
  • flower
    flower Registered Posts: 160 🎆 🐘 🎆
    I have to agree with DeanShepherd. £350 for an accountant is a steal. My partners accountant charges over £1000 to submit his accounts irrespective of his annual turnover. Seems something not quite right. Think I would be charging £350 as a book-keeper to do the job.
    Hope this helps.
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