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Free Tax Claim Factsheets
Tax Claim Facts for the Construction Industry Tax Scheme (CIS)
The Construction Industry Scheme (CIS) is generally only relevant to sub-contractors and contractors in the construction industry. The scheme provides the regulations for the payment of sub-contractors by contractors in the construction industry.
In this CIS Tax Claim Fact Sheet:
- Registering To Become A CIS Sub-Contractor
- CIS Sub Contractor Registration
- CIS Sub Contractor Tax Payments
- Class 2 NIC Payments
- Class 4 NIC Payments
- Self Assessment Tax Return?
- Penalties For Late Self Assessment Tax Returns
- CIS Tax Rebate
- What do I need to provide to complete a Self Assessment Tax Return?
Registering to become a CIS Sub-contractor
If you would like to work as CIS sub-contractor you are required to register with HMRC. The HMRC CIS helpline can help you further on 0845 366 7899.
It is recommended that you have your national insurance number and self assessment UTR number available when calling to help HMRC deal with your enquiry efficiently.
CIS Sub Contractor Registration
If you are working as a sub-contractor and have not yet registered with HMRC a deduction of 30% will be taken from the majority of your invoices instead of 20% from your contractor.
CIS Sub Contractor Tax Payments
A deduction of 20% will be taken from the majority of your invoices from your contractor if you have registered with HMRC.
The deduction is paid to HMRC as a direct payment for tax and class 4 national insurance contributions.
Class 2 NIC Payments
Class 2 national insurance payments are paid to HMRC if you are self employed.
You will pay a standard £2.50 per week if your earnings are over £5315 per annum in the tax year 2011-2012.
Class 4 NIC Payments
Class 4 national insurance payments are paid to HMRC if you are self employed if you have earnings over a certain amount. The Class 4 NIC payments are in addition to Class 2 national insurance contributions.
The amount paid depends on your profits in that tax year. Up to the 5th April 2011 the amount paid is 8% of your profit and 9% in the tax year 2011-2012 on any profits in that year between £7225 and £42475 and 2% of any profit over that amount.
The class 4 national insurance payments are calculated and paid through the completion of your self assessment tax return.
The class 4 payment is worked out automatically on the profit shown on your self assessment tax return.
Self Assessment Tax Return?
It is a legal obligation to complete a self assessment tax return if you are a CIS subcontractor.
At the end of each tax year which is the 5th April a self assessment tax return has to be completed. The tax return has to be completed by midnight on the 31 October for a paper tax return and by midnight 31 January for online tax returns.
If you were notified by HMRC to complete a self assessment tax return after the 31 October you will three months from the date of notification to complete the tax return.
Tax Rebate Services can help you complete your self assessment tax return >>
Penalties for Late Self Assessment Tax Returns
If you do not complete your self assessment tax return by the deadlines penalties will be imposed.
From the tax year ending 5th April 2012 any late penalties will be imposed by HMRC unless you have a reasonable excuse for missing the deadline.
The penalties imposed are as follows
| Length of delay | Penalty you will be asked to pay |
|---|---|
| One day | Initial £100 |
| Three months | £10 each day - up to maximum of £900. |
| Six months | £300 or 5% of the tax due, whichever is the higher. |
| Twelve months | £300 or 5% of the tax due, whichever is the higher. In serious cases you may be asked to pay up to 100% of the tax due instead. |
Cis Tax Rebate
To reclaim a CIS tax rebate whilst working as a CIS sub contractor you will have to complete a self assessment tax return at the end of each tax year.
It is important to keep all records from your sub contractor(s) showing income and tax details along with receipts from any expenses incurred due to your self employment.
The receipts and records of expenses incurred reduce your tax liability and increase the amount of any CIS tax refund due.
Tax Rebate Services have a very high success rate in securing the highest possible CIS Tax Refund.
What do I need to provide to complete a Self Assessment Tax Return?
You will have to provide all income and tax details from your contractor(s) in each tax year along with receipts for any expenses incurred due to your self employment.
Information from any employment under PAYE and any other additional income for example rental or investments have to be declared on the same self assessment tax return.
The most common expenses for a CIS subcontractor are:-
- Travelling (Car or Van / public transport)
- Accommodation / subsistence (food and refreshments)
- Tools / equipment
- Phone
- Use of home
- Bank Charges
- Accountant.
Any other expenses incurred due to your self employment can be considered and entered on your self assessment tax return.
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