The construction industry is very human-intensive as it requires a lot of labour to work for.  That is why a contractor can either employ those people who were working for them and they can pay them on the payroll, but what happens is that a lot of people who are working for the contractors are self-employed. 

The reason why they are self-employed is that today, they are working for this contractor, tomorrow for another contractor, and the third day for another one. And secondly, these people use their own tools. Thirdly, they can replace themselves – so, if there’s a lot going on, they can send someone else for their works. 

Owing to these circumstances, HMRC started this Construction Industry Scheme — commonly known as CIS — so that contractors can deduct tax from the salaries/income of those people who are self-employed and working for them.

HMRC had taken this decision because if gross payment is paid to the subcontractors, then, they will end up paying taxes at the year-end, which is really harsh resulting in cash flow problems. So, HMRC decided that if a contractor doesn’t put a person on their payroll, then the latter should be registered for CIS or they should be registered as self-employed. 

How much tax a CIS contractor can deduct from your salary?

A contractor deducts either 20{f5c46dbfd7a370437117a81398f3ac99c38e148024d17c03e20eb6cfc854a7af} or 30{f5c46dbfd7a370437117a81398f3ac99c38e148024d17c03e20eb6cfc854a7af}. 

20{f5c46dbfd7a370437117a81398f3ac99c38e148024d17c03e20eb6cfc854a7af} is deducted if you are a verified CIS subcontractor. A verified CIS subcontractor is one who has registered themselves with self-employment for CIS subcontractors. 

30{f5c46dbfd7a370437117a81398f3ac99c38e148024d17c03e20eb6cfc854a7af} is deducted if you are an unverified sub-contractor. 

This registration step is very important. It has been observed that a lot of subcontractors are unaware and they keep on paying CIS at 30{f5c46dbfd7a370437117a81398f3ac99c38e148024d17c03e20eb6cfc854a7af}. At the end of the day, they don’t even submit their tax returns, or if they submit their tax returns, they just submit the figures. They don’t claim any expenses, they don’t claim the tax back.

Here at IBISS & CO, our experts have claimed an average of 2,000 pounds for each CIS subcontractor. 

So, if you are a CIS subcontractor, we can help you claim the expenses. This leads us to the next question:

What expenses you can claim under CIS?

Tools you use, you can claim travel between the sites, because you have been traveling between one site to another.  

You can claim uniforms. 

You can claim the protective clothing you have been using during work hours. 

And, you can claim other expenses such as money you pay to seek accountancy advice. As a matter of fact, the accountancy fee is a tax-deductible expense. 

So actually, if you pay to an accountant or tax advisor, you are actually claiming more amount of a refund. 

So, it is actually in your benefit to hire a professional who can identify those expenses that you can claim back. 

So, reach out to us now for 15-Minute Free Telephonic Advice

Print Friendly, PDF & Email