RCT Forms, can somebody explain?

Hi. My husband has finally just got a job in construction following over a year of unemployment. He was previously an employee and is now going to be self employed working for a contractor. He now has to invoice his boss and will receive rct forms. Can somebody explain how this works, when he invoices does he charge vat and therefore does he have to make vat returns himself or when he submits the RCT form is that it - is he all clear and he just keeps the amount that he invoiced?. Sorry am just very confused about all of this.

Also, as he is now self employed, does that mean that if he is laid off again in a few months that he will not be eligible for unemployment allowance/benefit.

Sorry again for confused post am just lost from start to finish on this.

Ok so your husband is self employed. He has registered with Revenue for Income Tax & VAT.
VAT:
He does not charge any VAT on his invoice but should state "VAT on this supply to be accounted for by the Principle Contractor". He does have to make a bi-monthly VAT returns claiming VAT incurred on purchases.

RCT:
Relevant Contracts Tax. In the construction industry a withholding tax is applied to payments by Principles to subcontactors at a rate of 35%. This RCT can be used to pay any VAT or Income Tax liability. There is also a facility for interim refunds of RCT.
If he applies to the Inspector for a C2 cert he can get paid without the deduction of RCT.

Income Tax Return:
Your husband will still have to submit a Tax return Form 11 next year like all selfemployed people.

Thanks Joe 90 - I appreciate it.

Sorry one other thing that I meant to ask.

I took my husbands tax credits as he wasn't working - do I get them transferred back now or does it make a difference??

You can apportion the married tax credit between spouses in any way you wish, based on whatever suits yourself. Assuming you are in PAYE work, if you take all the credit then you will pay less tax now and pay more tax when your husband files his income tax return in Oct 2011 for tax year 2010. This is because all the credit will most likely have been used by you already.