CIS TAX RETURNS
Construction workers under the CIS (Construction Industry Scheme) like builders, plumbers, joiners, and site laborers can claim back CIS tax. Sub-contractors often overpay tax throughout the year due to higher deductions from their earnings. This can add up to significant sums annually. Sub-contractors can recover tax on various expenses.
The CIS was created by HM Revenue and Customs to prevent cash payments and tax evasion in the construction industry. Contractors withhold tax from sub-contractors’ payments and send it directly to HMRC. Sub-contractors can reclaim these deductions when filing taxes, leading to potential refunds. The CIS applies to all construction work in the UK, including that done by foreign firms.
If you work in construction, registering for the CIS is important. While not mandatory for sub-contractors, not registering may result in a higher tax rate of 30% instead of 20%. To register, gather your legal business name, National Insurance number, Unique Taxpayer Reference (UTR) number, and VAT number if applicable.
Detailed records, such as receipts and travel details, can enhance your CIS tax claims. Eligible expenses include travel, accommodation, protective gear, tools, administrative costs, and more. Certain expenses like architecture services, carpet installation, and machinery are not covered.
Registered CIS members face a 20% deduction rate, while unregistered individuals may encounter a 30% deduction. Securing Gross CIS status, with 0% deductions, can be beneficial for business investment. Failing to meet CIS return deadlines can result in penalties, so timely submission is crucial.
