freelance workers

[boobesque]

imagine that i make money by using a freelance worker (a sub contractor?). Maybe my business is lancing people. lets say for arguments sake that they make me �200 by lancing 20 people. we have an agreement that they will recieve 20% of the money they make me, which would be �40. would i pay tax on this �200 before giving my free lancer his share, then he pays extra tax on his earnings; would i pay tax on the �200 then give him 20% which he pays no further tax on or would i give him 20% and pay tax on the remaining �160, leaving him to pay tax on his 20%? english tax please
thank you

[Ethel]

Tax is paid on profits. Payments to employees / freelancers / sub-contractors are expenses and not subject to tax.

You would record this �40 as an expense. You would give freelancer �40. Whether he pays tax or not is not your concern - it is for him to declare it to the Inland Revenue and offset any expenses he has incurred.

The �160 remainding may be subject to further legitimate deductions before being subject to income tax.

[boobesque]

thanks. thats a great help