CIS – Construction Industry Scheme
What is CIS?
If you work for a contractor in the construction industry as a self-employed individual then, under the CIS, the contractor is obliged to withhold tax on its payments to you. This is different from other self-employed individuals, who normally receive their payments gross.
Registered CIS workers receive their payments net of 20% tax. If a subcontractor is unregistered, they will receive their payment net of 30% tax. It is also possible to apply to receive payments gross.
There is more information on the CIS on https://www.gov.uk/what-is-the-construction-industry-scheme
How to claim back tax under the Construction Industry Scheme (CIS)?
Are you taxed under CIS? If so then your contractor is obliged to withhold tax on its payments to you. Many people under CIS overpay tax as a consequence and need to claim a refund, here at Rebate My Tax we can guide you on what expenses you can put through and get you the biggest rebate, but below is more information on the construction industry scheme.
When will a refund be due?
Where tax is deducted under CIS and you are on a lower income, a refund will normally arise because of the expenses of the trade and because you will normally have personal allowances available.
You can check with us here at Rebate My Tax on the types of expenses that you may be able claim in your tax return. The general rule is that any expenses must be wholly and exclusively incurred in relation to your work. This is why it is important to keep your receipts and either upload them to the Rebate My Tax app or send them via post to us.
It is worth bearing this in mind, because you may be asked to provide evidence by HMRC that firstly, you actually incurred an expense and secondly, the expense was wholly and exclusively for your business. You should not just make them up or put in private expenses just so you can reduce your taxable profits and get a bigger refund – it is illegal and penalties are severe.
How do I get the refund?
If you work under the CIS, we will file your Self-Assessment tax return and your refund will be reconciled as part of this.
Should I use an agent to file my tax return and get my refund?
Under CIS, you are faced with having to complete and submit an annual tax return to claim what may be a fairly significant tax refund.
Completing and submitting a Self Assessment tax return can be complex and daunting, that is where we come in, we will go through your income and expenses and get the best possible refund for you.
You should be aware that when it comes to CIS, there can be problems with certain tax agents, for example some agents might inflate the tax refund adding more expenses to maximise the percentage they will take. While you may be tempted to turn a blind eye to such a thing, as this will mean a higher refund in the first instance, if HMRC check your tax return, it is you rather than the agent who will have to account for the underpaid tax, perhaps some years later. In such cases, on the basis that a fee will have been deducted already by the tax refund organisation, the HMRC debt may well be more than the financial benefit you received in the first place.
In these instances, we have also heard of severe penalties being charged for the submission of an incorrect tax return.
At Rebate My Tax, we specialise in CIS workers, we pride ourselves in being able to offer a totally bespoke service, giving our clients the most personal and professional service. We provide a fast, hassle-free, honest tax refund service and build relationships with our customers so we can provide them with the best personal and professional services.