strange tax situation

[jeffreyw]

basically i work as a gas fitter and i am on the books of my company
i earned around 36 grand last year
i get paid price work and i dictate how much my apprentice gets
he is 18 years old and has just got his nvq 2 in plumbing
we paid the wages seperately so he got his wage and i got mine eg me 800 him 400 quid
the company want me now to put any extra money i am paying the apprentice on to my wage any thing over 206 pound and give it to him after its been through my tax
which will i think put me in to the higher tax bracket
i am going to give him the money minus 40percent to cover my taxation
can any one give me any advice or tell me any effects this thing i have to do will have on my wages

 

[ColJack]

as you are getting paid a price then you technically employ the 'prentice..

so i think they are within their rights to pay you the whole amount and make you pay the prentice out of it..

I don't think it will put you into the higher tax band because it's not a personal income, it's a business income and expenditure.. like buying pipe and charging the customer.. your income will be calculated after such expenditures..

I had a good accountant, and after some creative book keeping, I was only earning 9-11000ish a year out of the 20-24000 that went through my bank account... and was taxed accordingly.. usually ending up with a 1500-2000ish tax rebate every year because I was getting 18% took off every pay check..

then again I'm not a tax expert.. so you might want to seek professional advice from maybe a tax lawyer or your accountant..

 

[noseall]

Does this agreement not make you his employer?

If so, then a whole new can o' worms opens up.

Watch out for vat limits too.

 

[jeffreyw]

our company pay our national insurance tax and every thing so i cant claim anything back dont think anyway

 

[jeffreyw]

they pay for him to go to college am sure he is def one of the firm employees

 

[ColJack]

the how is it price work if you get paid a weekly wage?

you either say it's 6000 for a 4 week job then draw 1200 a week, 800 for you and 400 for him a week, or you get a weekly wage...

even if they do give the money straight to him, you're setting the total price, so it's your money they're giving him..

 

[Blasphemous]

I had a good accountant, and after some creative book keeping, I was only earning 9-11000ish a year out of the 20-24000 that went through my bank account... and was taxed accordingly.. usually ending up with a 1500-2000ish tax rebate every year because I was getting 18% took off every pay check..

then again I'm not a tax expert.. so you might want to seek professional advice from maybe a tax lawyer or your accountant..

One of my pal's is a HMRC 'Tax Expert'. I know this ain't gonna be news to most of the lads here but they view this and most of the other 'trade web sites' as part of their 'intelligence gathering'. They're gonna be SOOOOO interested in having a 'chat' with you about that....

jeffreyw, you may not wish to answer this but, you said in the OP,

i am on the books of my company.

Do you mean 'you' are on the books but the Apprentice is not? It may well be that the company are 'putting their house in order'. The rules have just changed on 'visits' from HMRC. They will now turn up unannounced. It may be that your company have been advised by their Accountants to get things 'in order'. This 'may' be the reasoning behind their new approach.

 

[PE]

basically i work as a gas fitter and i am on the books of my company
i earned around 36 grand last year
i get paid price work and i dictate how much my apprentice gets
he is 18 years old and has just got his nvq 2 in plumbing
we paid the wages seperately so he got his wage and i got mine eg me 800 him 400 quid
the company want me now to put any extra money i am paying the apprentice on to my wage any thing over 206 pound and give it to him after its been through my tax
which will i think put me in to the higher tax bracket
i am going to give him the money minus 40percent to cover my taxation
can any one give me any advice or tell me any effects this thing i have to do will have on my wages

Get yourself an accountant - we don't bite you know!

You've definitely got a "status" issue there by the sounds of it as you are an employed person who is then employing his own apprentice.

Either insist your apprentice is employed by the company currently paying you both and they continue to pay him minus his own tax and NI (after all this is what they have already been doing) or look into going self employed yourself as you would be employing/contracting your own staff

Whatever you do I would not agree to the proposed new arrangment as you would be acting potentially as employer and technically need to set up your own PAYE scheme and your apprentice would have emloyment rights via you (ie redundancy, holiday, sick pay etc)

Seek advice now asit could cost you a fortune if you get it wrong

 

[ColJack]

so how exactly are they going to trace me blas?

even so, it's not illegal, it's all above board..

my mother answered telephone calls and took messages, so that's secretarial work, and she washed my work clothes, so that's laundry service, I paid her for these services along with utility bills..

 

[jeffreyw]

apprentice get his paid holiday as do i we are both employees
get monthly wage even rang the inland revenue and they thought it was all odd and that it made no sense
heard some rumours the company thought i was tax fidling
they thought i was putting the money through the apprentices wage and gettin it back obviosly at cheaper tax
but that wasnt the case he just got what he was worth
i also have been told its because he is 18 and has a salary cap and because he aint classed as qualified and time served he cant get the big money as basically his work is in my name
every one thinks that i am self employed when i tell them the scenario
its just gone way over my head too technical all the tax issues

 

[jeffreyw]

the question for me now is how do i stop the possble effects of paying more tax effecting me
eg what do i charge the apprentice on his wage also heard that national insurance goes up for people earning over 40 k

 

[PE]

If the company is officially employing you both (do you both get a wage slip and have a PAYE number on that slip) then unless they are making him redundant/sacking him they cannot just pay you his wages

Sit down with the company and discuss it and then get an accountant if you need to. Something doesn't stack up right, from what you have posted so far though

 

[Blasphemous]

so how exactly are they going to trace me blas?

even so, it's not illegal, it's all above board..

my mother answered telephone calls and took messages, so that's secretarial work, and she washed my work clothes, so that's laundry service, I paid her for these services along with utility bills..

As you may or may not be aware, HMRC's rights of access are greater than Plod's. I ain't interested in debating with you the 'feasibility' of how they can/cannot 'trace' you and considering your little story above, I'm sure your Submitted Accounts reflected all of those 'expenses', you therefore have nothing to worry about.............. "....was that someone knocking at the front door"?

 

[PE]

so how exactly are they going to trace me blas?

even so, it's not illegal, it's all above board..

my mother answered telephone calls and took messages, so that's secretarial work, and she washed my work clothes, so that's laundry service, I paid her for these services along with utility bills..

As you may or may not be aware, HMRC's rights of access are greater than Plod's. I ain't interested in debating with you the 'feasibility' of how they can/cannot 'trace' you and considering your little story above, I'm sure your Submitted Accounts reflected all of those 'expenses', you therefore have nothing to worry about.............. "....was that someone knocking at the front door"?

Do you read the Daily Mail.......

 

[jeffreyw]

yeah its just anything over 206 pound per week has to go through my wage and we both get pay slips
i tried reasoning with the head guy of the firm the owner and he was just in robotic mode on the phone just telling me and not willing to listen all buisnessman like so realistically how far can you go with out getting the boot jobs are scarce at the minute