Thank you for the explanation of the split transaction, which I understand. However, my question wasn't fully addressed.
My specific concern is about the categorisation of the pass-through amount (Β£1,200). When I record this as a business expense, won't it create a tax deduction that I shouldn't be entitled to, since this money isn't truly my business expense but rather a payment that passes through me to my colleague?
I'm essentially acting as an intermediary - the client pays me, I take my commission, and I pass the remainder to my colleague who performs the work. I want to ensure that:
1. Only my commission (Β£300) is taxable income
2. The pass-through amount (Β£1,200) doesn't create an inappropriate tax deduction
3. I maintain proper records for HMRC compliance.
I handle my own taxes as they're straightforward, so I don't have an accountant to consult. Could you clarify which specific expense category would be appropriate for this pass-through payment, or confirm whether marking it as "Personal" would be more accurate to avoid any tax implications?
Additionally, are there any other considerations I should be aware of regarding this type of arrangement for Self Assessment purposes?
Thanks for your continued assistance.
