Contractor , sub contracting - Tax question


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Hi All

I am currently a contractor for a company which uses my services for design and consultancy related work for which I get paid around 1,300 per month (I am home based). I subcontract most of this design work to a designer in Russia and pay him around £400 per month.

I have the following two questions which I'd be grateful if I could get some advice on:

1. Do I pay tax on the £1300 or only on £900?

2. I also get other work done by another developer in Russia which is not related to my contract which comes to around £200pm extra for building a web based software which I hope to help me in my business. Will this be classed as an expense for me, so that my taxable income is £700 rather than £900?

Cheers
 
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I can only answer in regard to US law, but here you would claim the entire 1300 as income, and then count the 400 as a business expense.
 
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Hi All

I am currently a contractor for a company which uses my services for design and consultancy related work for which I get paid around 1,300 per month (I am home based). I subcontract most of this design work to a designer in Russia and pay him around £400 per month.

I have the following two questions which I'd be grateful if I could get some advice on:

1. Do I pay tax on the £1300 or only on £900?

Basically, the £1,300 would be included as part of your business turnover, while the £400 payment is an allowable expense. So the answer is yes!

2. I also get other work done by another developer in Russia which is not related to my contract which comes to around £200pm extra for building a web based software which I hope to help me in my business. Will this be classed as an expense for me, so that my taxable income is £700 rather than £900?

If the expense is wholly and exclusively for the business, then you can this as an allowable expense.

Cheers
I hope this answers your questions.
 

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