When you work as a subcontractor within the Construction Industry Scheme (CIS), the contractor you work for is required to make tax deductions from the amount they pay you.
Although this is similar to most employees, the rates that are deducted under CIS are often HIGHER than the rate an employee would pay. It also gives no allowance for the amount that you are allowed to earn tax free.
For example, the Construction Industry Scheme (CIS) deduction rates are:
20% for registered subcontractors
30% for unregistered subcontractors.
These tax deduction rates do not take into account that, as a self employed individual, you are entitled to claim a variety of expenses on things like travel costs, telephone costs & consumables like small tools that you pay for.
The good news is that you are entitled to claim for your expenses on your tax return and can reclaim any overpaid tax, in cash.
The majority of self employed subcontractors working in the Construction Industry are due a refund every year!
Tax Law can be complicated but Hentons can assist you with the process and your claim for a refund.
Don’t Let HMRC Get Away With It!!
Contact Hentons Tax Director, Gary Olding, to find out how we can help: