CIS Tax Returns
Construction workers, including builders, plumbers, joiners and site labourers who are using the CIS (Construction Industry Scheme) can claim CIS tax returns. The main reason for sub-contractors tax rebates is too much tax is deducted from their pay, over the course of the financial year this can run into hundreds or even thousands of pounds. As a sub-contractor, you are then able to reclaim tax back on a number of expenses.
What is CIS tax?
The CIS was brought in by HM Revenue and Customs to help end cash in hand labour and the avoidance of paying tax. Under the rules of the CIS, a contractor paying sub-contractors is to withhold their tax deductions and pay them directly to HRMC. When the sub-contractor is filing their tax returns, they can then claim back the deductions to offset the tax for the year; it is then common that a tax refund is due. CIS covers all construction work in the UK, including work done by foreign companies.
How do I register for a CIS number?
If you are in the construction industry, you will need to register for the Construction Industry Scheme. For sub-contractors, it is not compulsory for you to join, although if you don’t register, you could end up paying 30% in tax rather than the lower 20%. To register you will need the following information to hand:
• A legal business name
• Your National Insurance number
• Your UTR number (Unique Taxpayer Reference number)
• VAT number (if you are VAT registered)
What expenses can I claim for on my CIS tax return?
The more information that you can supply on your CIS tax returns the better. Having all the information available such as receipts, travel dates & places will allow you to claim back as much as possible. You can claim back expenses such as:
• Business Travel including mileage and public transport
• Lodgings, parking, tolls and meals (in certain circumstances)
• Protective clothing, tools, equipment and materials
• Adminstive costs, phone bills, postage and stationery
• Advertising expenses
• Fees, including public liability insurance, account fees & bank charges
What work does CIS not cover?
• Architecture and surveying work
• Scaffold hire (without labour)
• Carpet, vinyl, and laminate fitting
• Manufacturing materials machinery
• The delivery of materials
• Site facilities such as on-site canteens.
What are the CIS deduction rates?
If you are registered with the CIS, you will pay 20%, if you have not registered you as a company, sub-contractor or HMRC have no records of you, then a rate of 30% is applied. Applying for Gross CIS status (0% gross payments – no tax deducted) can be hard, but it can free up vital funds for you to invest in your business.
Are there penalties for filing CIS returns late?
There are penalties for filing any tax return late, including CIS, even filing one day late can result in a fine. It is vital that you keep track of the deadline dates and give yourself plenty of time to fill in and submit your return online, you should give yourself more time if you are sending it by post.
What Can I Claim Tax Back On?
You can claim tax back on most work-related expenses. Below is a list of items that you can request a tax rebate on:
• Vehicles for work use
• Fuel/Mileage costs
• Travel expenses
• Overnight expenses (food in certain circumstances)
• Rail Tickets (single & season tickets)
• Uniforms, work clothing and tools
• Cleaning costs for uniforms
• Professional fees, subscriptions & unions fees
This list is an example of what you could claim back; there may be expenses & items specific to the job role that you could claim back.
Am I Due Any Tax Back?
Most workers, whether employed or self-employed may be due a tax rebate for work-related items, expenses or because they have paid too much tax. HMRC do not know everyone’s individual circumstances, and it is up to the taxpayer to contact HMRC to see if they are entitled to any tax relief.
Other reasons for a tax refund may include pension payments, redundancy payments, interest from a savings account, PPI, or UK income if you are living aboard.
All claims for tax refunds and rebates are reviewed on a case by case basis. Use our tax claim form and answer a few simple questions to see if you could be entitled to make a claim.
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