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Mileage allowance for sub contractors

Hi

I do the books for a builder and he has several sub contractors working for him.  He is self employed and not a Limited company. He pays the men an amount say £50 -£100 to cover their mileage if they travel more than say 20 miles from home.  Is this ok to do this?  Also should I deduct CIS from this amount?  He doesn't pay a mileage of 40/45p but just a set amount. I hope someone can help. Many thanks.

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By zebaa
18th Sep 2011 15:10

No, it is not okay

Mileage payment is for the distance traveled in the course of the job. Your builder has a problem then it looks to me.

See also:http://www.accountingweb.co.uk/anyanswers/mileage-cis-subcontractor

 

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By pauld
18th Sep 2011 19:53

why not ok ?

Surely he can pay them whatever he wants so long as he deducts 20%/30% tax.

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By zebaa
18th Sep 2011 20:35

Is the tax paid...?

I take it that tax had not been paid. Of course I could be wrong, perhaps we will know later.

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Not employee

As he is using subbies any payment has to be split between materials and the rest. However he describes it if it is not materials it has to be subjected to CIS deduction.

Marion

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Why not just deduct 20% it

Why not just CIS it and deduct 20% on it all as no expense receipts are being provided. It'll just mean a bigger refund at the year as tax would of been deducted not taking into account the mileage they will be actually doing. Client doesn't have to worry, subbie gets more money at the end. Wins all around.

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Agree with Marion and Clegganator

The thing is, the contractor can call it what he likes but it isn't really classed as mileage allowance by HMRC, just additional self-employed income.

The 45p/25p rates do not apply to a subbie paying a contractor so, he can pay them what he likes, as long as he deducts the CIS tax from it.

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