The Construction Industry Scheme, or CIS, is a scheme whereby a contractor in the construction industry usually deducts a proportion of the money because of their subcontractor, at the foundation. The deducted amount is then passed direct to HMRC and counts for the subcontractor’s tax and National Insurance, the tax factor effectively being paid beforehand. The precise proportion deducted depends on if the subcontractor concerned has registered under the CIS system. When the subcontractor hasn’t registered, the deduction will most likely be made for a price of 30%. If indeed they have previously registered, then your deduction will most likely be made for a price of 20%. In any event, by the financial year end, the amount of tax deducted at the foundation will most likely finish up being more than they really had a need to have paid, due to the fact it won’t have considered the non-public allowance which every UK taxpayer is entitled to (most UK citizens can earn up to £10,000 before paying tax at time of writing, this figure being set to go up to £10,600 in the tax year 2015-16, 10,800 a year later then increasing to £11,000 by 2017-18 following recent budget proposals). Hence, many subcontractors in the construction industry will be due a tax refund due to overpayment. The good news is that enough time to use for the refund is just about now, so get in contact if you’d like our help claiming.
You qualify to maintain the CIS system if you are a subcontractor who supplies construction work to buildings. This consists of labouring, decorating, site preparation, and refurbishment but excludes things such as architecture, surveying services, the hire of scaffolding without labour, the fitting of carpets, the delivery of materials, and lastly non-construction type services such as site facilities (canteens, etc.).
Imagine if your business is not in the united kingdom?
Even when your business is abroad, the same rules apply if you are a subcontractor within the united kingdom. However, there are some slightly different rules about the treatment of taxation for non-resident staff from countries which have ‘Double Taxation’ treaties with the UK (we can, of course, also benefit that – just get in touch).
Registering for CIS
In the event that you haven’t already registered for CIS as a sub-contractor, vortexaccountants.co.uk can help to do this for you. You’ll have to be registered for Self Assessment (we can also improve this) which will provide you with your UTR (unique taxpayer reference) number. We’ll also need your name, National Insurance number, your legal business/trading name and contact details. Once registered with CIS one of the immediate benefits will be that you’ll then have tax deductions made at the 20% rate rather than at 30%, which would otherwise be the case. If your business is a legal partnership you’ll also need to join up it for CIS but this might have to be done not only is it registered as a person or sole trader. Certainly, vortexaccountants.co.uk can help with that too. Once you’ve been registered with CIS and also have passed certain eligibility criteria, it is also possible to use for ‘gross payment status’ and therefore you’ll then be paid by the contractor without the most common ‘at source’ deductions. Instead, you’ll need to pay any outstanding tax and National Insurance at the financial year-end; however, HMRC will review your business each year to check that you’ll still be eligible for this status (paying tax late and/or submitting returns late would put your gross payment status at risk).
Offsetting expenses against your tax
vortexaccountants.co.uk can also enable you to offset certain expenses against your subcontractor’s income. Which means that any tax refund will be larger – or any tax outstanding will be lower. We are able to offset VAT, certain materials, equipment, tools, and any plant hired for the task you supplied. However, we can only do this if you keep good records – and receipts – for the expenses in question. We’ll also need to see copies of the monthly statements that your contractor will have supplied you over summer and winter.
Keeping Good Records
vortexaccountants.co.uk can help their CIS customers to keep good income and expenditure records by supplying them with a free of charge online accounting package called ‘Sage One Cash Book’. All vortexaccountants.co.uk clients meet the criteria because of this so just contact us if you want. It really is free since it will help us, as well as our clients since it we can collaborate with clients on the accounts in real-time. (More info).
Copies of bank statements or – better still – electronic bank statement downloads from online banking accounts will also make things even easier and faster for both subcontractor and vortexaccountants.co.uk so ask us about the many options available, or read more about sharing your bank statement information electronically here.
TIP! Using a debit card to pay for your expenses and tools means that you/we will always have an archive of your expenses although you may ever lose your receipt(s).
How do you claim your CIS tax refund?
For sole traders and partnerships, vortexaccountants.co.uk can help to complete and submit the mandatory Self Assessment tax return, including information on the amounts you have invoiced as a subcontractor and an email of any allowable expenses which can be used to offset your earnings and thereby decrease your tax and National Insurance bill.
For Limited companies that have ‘gross payment status’ (see above) we can help complete and submit the mandatory Corporation Tax Return, assistance with payroll (particularly important regarding CIS deductions for Limited companies), ensure that your ‘FPS’ and ‘EPS’ submissions have been designed to HMRC accurately and promptly and finally help complete and submit CIS132 forms when and where applicable. Combined, these allows HMRC and vortexaccountants.co.uk to acknowledge the right tax and National Insurance and any outstanding balance due.
In any event, if you’d like help claiming your CIS refund or getting the tax, come in and speak to us inside our on tel. 01375 673361 fax. 01375 676711. You could alternatively email us at firstname.lastname@example.org or book an appointment with one of our CIS tax advisers here. Once you’re a client you can call us any moment for any insight you might require with regards to tax and CIS.
We’re a CIS one-stop-shop!
Incidentally, we can also help new subcontractors to create as sole traders, partnerships, or limited companies, with a bank account, also to register with HMRC as appropriate – we’re a CIS one-stop-shop!
We are highly knowledgeable, very experienced and good value for Construction Tax Refunds work.