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Umbrella Company

a friend drives a taxi on the weekends for additional income. he is also a contract engineer being paid as an employee via an umbrella company.

recently, he was advised to register as self employed in order to put in self assessments for his taxi income

His umbrella company have now advised him that he will have 20% deducted (which i assume is CIS) and have to pay over his NI himself.

This is confusing as registering for self employment to pay across tax on the taxi should not alter his sitaution with the Umbrella company.

please can someone advise

thanks

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This is what is called gin and tonic tax advice

If he is self employed as a taxi driver then who is supposed to deduct the 20% tax? I'll try deducting 20% tax next time I use a taxi and see what sort of a reaction I get.

If he is an employee then he should be on PAYE when NICs would also be payable. CIS only applies to self employed subcontractors in the building trade. The definition of construction is quite wide but it does not include taxi work.

If he is paid gross then all he needs to do is register as self employed and submit self assessment tax returns.

Or perhaps he is not genuinely self employed but has been told by the company that he works for that he is responsible for his own tax. If that is the case then that is their problem if it is ruled that employee status should be applied. Again all he needs to do is register as self employed and submit self assessment tax returns. 

 

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And yes

What he does in his spare time has no bearing on his relationship with the umbrella company.

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