Obligations as a sub-contractor

If the subcontractor is a self-employed individual, they should inform the Income Tax Division of their intention to be self-employed. They must also be registered to pay Class 2 National Insurance contributions in order to be entitled to a subcontractor’s tax exemption certificate.

Each time a subcontractor receives a payment from a contractor they should also receive a form C11 Certificate of Tax Deducted in Respect of Subcontracted Work. The subcontractor must retain these certificates as evidence of their pay and tax deducted in order to support the income declared on their tax return.

Form C11 contains a box for the contractor to confirm the subcontractor’s tax code. If the subcontractor holds a valid tax exemption certificate, the code will be NT, meaning no tax will be deducted. However, if a valid certificate is not held, the code will be HR, meaning tax will be deducted at a rate of 20%. The form also asks the contractor to state the period to which the payment relates.

At the end of each tax year, the subcontractor should receive a form C14 Isle of Man Subcontractor’s Deduction Card from the contractor. This will record the amount of gross labour paid, the amount of materials, and the total tax deducted together with the subcontractor’s personal details and, where appropriate, their tax exemption number. This form should be submitted with the subcontractor’s income tax return.