lor Registered Posts: 68 ? ? ?
If I have a client who subcontracts work, how would you do the wages for him, what is the best and HMRC compliant way a or b, or both. And does the answer depend on his trade?

a) ring up HMRC to verify him 1st, which they will then advise how much to stop him, 20%, 30% or pay gross. From there I have to stop his tax and NI, issue a pay slip.

b) pay him x amount, eg to keep to round numbers, 20 hr @ £10 = £200 per week. So just pay him £400 every 2 weeks. No need to worry about his ni or tax at all. Let him worry about declaring his tax and ni on self assessmet. Then to keep records straight get him to invoice you with the amount you are paying eg £400. No need for payslips this way.

Thanks in advance.


  • rwb
    rwb Registered Posts: 32 Regular contributor ⭐ ? ⭐
    Could do with a little clarification here, do you mean you have a client who engages subcontractors to carry out work on their businesses behalf or that you have a client who carries out subcontract work for other businesses?

    In pretty general terms either way I wouldn't expect to see a subcontractor being paid 'wages' (i.e. through a payroll) as you are describing. Your option 'a' is broadly referring to CIS by the looks of things - which relates specifically to the Construction Industry and would be irrelevant if your client was not involved in that field - while your option 'b' is, I think, considering having the client issue an invoice for work carried out. In fact both scenarios would require the client to invoice for the work.

    Your client is either an employee, on a payroll and paid wages under a PAYE scheme with RTI submissions done etc. or they are not. I would expect a subcontractor to invoice their end client for works done and not be paid 'wages' by their clients in the way you seem to be using the term.

    Happy to help further though if you can clarify.
  • lor
    lor Registered Posts: 68 ? ? ?

    I didn't word it very well. I mean't I have a client who is in the building trade himself on a self employed basis. He is about to take on a sub-contractor to help him with his work load within the building trade.

    Wages is completely the wrong terminology as that implies he is an employee (agreed). He would in fact be a sub-contractor. CIS would be relevant to him being in the building trade, therefore he needs to follow the rules on:

    Thank you for your help rwb.
  • Gem7321
    Gem7321 MAAT, AAT Licensed Accountant Posts: 1,438
    Your client needs to register as a contractor and needs to verify each subcontractor. The subcontractor should invoice your client. You don't make any deductions for NI, only for CIS at the rate HMRC advise on the labour element only. The subcontractor should be issued with a CIS statement (not a payslip) showing this.
  • lor
    lor Registered Posts: 68 ? ? ?
    Thanks Gem 7321.
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