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What is the Construction Industry Scheme (CIS)?
If you’re self-employed and work in the construction industry or on site as a plumber or heating engineer for example, you’d fall under the CIS. Construction workers who are subcontracted by contractors will have CIS deductions taken towards tax and national insurance, which are then passed through to HMRC.
These Tax deductions can then be calculated at the end of the Tax year in your Self Assessment, allowing you to claim a CIS Tax refund on any CIS deductions you’ve overpaid. It can sound daunting, but having the support of experienced Tax experts makes the experience a doddle.
I work in the construction industry, do I qualify for the CIS?
The Construction Industry Scheme is designed for self-employed people working in construction. CIS works according to HMRC includes work undertaken to permanent or temporary building structures, or civil engineering work like roads and bridges for example.
Construction work, as far as CIS is concerned at least, includes: Site preparation and the provision of access works or laying foundations, building work, alterations, repairs and decoration, the installation of heating, lighting, power, water and ventilation, subsequent cleaning of site following completion of construction work and any dismantling or demolition works required.
How much Tax is deducted if I am registered for CIS?
CIS registered operatives will pay a 20% Tax rate.
How do I claim a CIS Tax refund?
Claiming your CIS Tax refund is far easier than you might think. At the end of each Tax year, you need to submit a Tax return to HMRC. From this process you’ll know exactly what Tax and National Insurance you owe which is offset against any tax deductions you’ve already paid.
In most cases, this will entitle you to a tax refund, if you're under the CIS. If you’d like tax experts to take care of this for you, contact us and one of our dedicated consultants will talk you through every step over the phone. We’ll then start preparing your tax return right away and in many cases, can submit on the same day
How do I know what I’m due back from my CIS tax refund?
The refund you may get back depends on three things: Your CIS deductions, total earnings and business expenses. The average Tax refund for our customers is £2,300. In some cases you can receive several years of overpaid refunds — if you’re eligible, CIS Tax can even be claimed back for the previous four years. As a CIS worker, you’ll be required to make contributions for Tax and National Insurance each month.
The amount of Tax you pay is typically 20%, but will be determined by HMRC when the contractor you work for verifies your UTR number. Your refund calculation starts by looking at your total income for the year and deducting any allowable business expenses. When you know exactly how much profit you’ve earned for the Tax year, you can then work out how much of it you have already paid.
Remember, you will take into account your Tax-free earnings and any National Insurance contributions too. Finally, once you know your income, profit, Tax and National Insurance contributions, you’ll take the difference between the Tax you've already paid and the actual figure you’re required to pay. This will show you whether you’re entitled to a refund, or subject to a liability (a bill for Taxes to be paid).