Are you due a CIS tax rebate?
If you are a subcontractor working within the construction industry through the CIS (Construction Industry) Scheme you are almost certainly due some tax back for the previous tax year.
The Construction Industry Scheme, or CIS, is a scheme whereby a contractor in the construction industry takes 20% tax from you for all work completed and pays that to HMRC at the point of each invoice. The idea is that this CIS deducted amount is an advance payment towards your tax and NI in the year. The problem is that it doesn’t consider any tax-free allowances you have and or expenses incurred and therefore you must tell them on your self-assessment tax return and why you are usually due money back on completing your self-assessment tax return. Whilst CIS is usually taken at 20%, in some cases the scheme can deduct 30% and therefore it’s very important to stay on top of your CIS deductions and claim back as soon as possible. One Abacus can help you with this.
Should I register?
CIS can cover many things throughout the construction industry from major groundworks and building and engineering roles to trades such as plumbers, heating services, carpenters, electricians and plasterers. There are much more but your client or employer will be able to advise for sure.
If you are a subcontractor, either as a sole trader or a limited company you need to be registered for CIS. If you cannot be verified by a client / employer they may have to deduct more CIS from you. If you are a sole trader then you need to be registered for self-assessment and if you are a limited company then you must be registered as a PAYE employer. One Abacus can help where needed.
When you start work on a new CIS job you will have to supply the unique tax reference number for either your sole trader account or your limited company (UTR). If you are a limited company be careful not to confuse these as you will have two in that instance. We will also need your name, National Insurance number, your legal business/trading name and contact details.
In some cases, it is also possible to apply for gross payment status which means that you will NOT have CIS deducted at source and will receive payment for the full value of your invoice instead. Criteria for this is strict however and you must meet this every year or it will revert back. One Abacus can help you apply for this is if it is something you are interested in.
One Abacus can help you to keep good records by offering you award winning FreeAgent or Xero bookkeeping software which would allow you to raise and send invoices and manage your expenses at the touch of a button. If a shoebox of receipts is more your style, that works too. The main thing is that we have records of all the CIS statements for the period, all bank statements for the period and any receipts for expenses you wish to claim.
Reclaim CIS suffered
Claiming back CIS suffered is different depending on whether you are a sole trader or a limited company. For sole traders or self-employed workers CIS is claimed when completing your self-assessment tax return and the earliest this ca be done in 6th April each year. One Abacus can normally get your rebate through with two weeks of completing the self-assessment.
As a limited company, CIS is claimed through the employer PAYE system even if the only person in the limited company is you. One Abacus can handle the whole process here from registering you as an employer to formally requesting the money back. As a limited company this process can take a bit longer but is generally between 2-4 weeks to receive your rebate.