All you need to know about CIS tax refunds
posted 15th October 2021
If you are a subcontractor, chances are you are due a tax refund. To get this refund you must submit a Self-assessment tax return to HM Revenue and Customs (HMRC). Sound like a pain? That's where we come in: Lancing Cotswold, CIS tax refunds London.
What is the process if I hire you?
1) We register you for self-assessment with HMRC
2) You send us your paperwork
3) We do all the work
4) You approve the tax return using your phone
5) We submit the tax return to HMRC
6) HMRC refund the payment straight to your account!
What is the Construction Industry Scheme
Under the Construction Industry Scheme, the contractor must deduct money from the subcontractor's payment and pay this over to HMRC. Most other self-employed people (for example: barbers, photographers, free lancers, taxi drivers) pay tax to HMRC by the 31 January following the 5 April tax year. Unfortunately, HMRC have concluded most CIS sub-contractors do not pay their fair share of tax and therefore decided to make the contractor deduct and pay over the tax from subcontractor payments each week/month. This way HMRC do not lose out. If a subcontractor is then due a refund at the end of the year, HMRC are happy to repay them, but the subcontractor must make a claim (by way of a self-assessment tax return) to claim the overpaid tax back! Sound unfair?
How much tax can the contractor deduct from my pay?
It could be 0%, 20% or 30%.
Can you give me an worked example?
| £ | |
|---|---|
| Income in the year | 30,000 |
| Purchase of tools, safety equipment | (5,000) |
| Taxable income | 25,000 |
| Tax and ni due | 4,054 |
| CIS tax already deducted | (6,000) |
| CIS tax refund due | £1,946 |
Also read: Tips And Resources For Buying A Home Safely During A Pandemic
The process of getting your tax refund
• If you are a sole trader
If you have received income from your contractor with a tax deduction (you can see this on your payslips), you will have to register yourself with HMRC to claim the refund. The registration process normally takes 3-4 weeks, and we can do this for you. HMRC need your basic details (name, address) and your national insurance number.
Once registered for self-assessment, you will need to submit a claim with HM Revenue and Custom by filing a self-assessment tax return. It is best practice to prepare accounts for your "sole-trader" business. We do this by analysing your payslips, receipts, invoices, bank statements and P60.
After submitting the tax return, HMRC either issue the tax refund or ask further questions and may request to see evidence such as receipts and copies of the payslips (they do not like giving money back!)
• If you are a limited company
If you are a Limited Company, declare your gross payment status in the tax return application. For CIS deductions, you can claim them back through the monthly payroll scheme of your company. You should not claim it through Corporation Tax Return. You may be charged with a penalty if you do so.
For the claim process, send the details of your monthly FPS (Full Payment Submission) to HMRC. Along with, send the EPS (Employee Payment Summary), including the total CIS deductions made for the year. The HM Revenue and Custom will take off your CIS deductions and will ask you to pay the PAYE tax and National Insurance as you owe. You should pay it by the date set by HMRC.
Can CIS subcontractors make claims for expenses?
Yes. Any expenses you incur in your trade count as deductible. Such as: cost of materials, tools, safety equipment, temporary accommodation, plant, and machinery rental and so on. Travelling costs for commuting to a workplace are a grey area and depend on your personal circumstances. We are happy to advise on a case by case basis.
The easy way to submit CIS tax refund claim in London
If the process seems stressful, rest assured, you are not alone! The process is time consuming, and the online tax return is not a user-friendly experience. For a small fixed fee, give up your worries to us and let us deal with your CIS tax refund.
We at will take care of your self- assessment and submit this to HMRC on your behalf. All you will need to do is provide us with all your paperwork (through the post or uploading using our "portal"). All you do then is approve the tax return using your mobile.
Why should I hire you?
We are professionally trained, have several years of experience and our prices are excellent value for money.
Do you charge commissions?
No! Our price is fixed and agreed with you up front.
Next steps
Contact Lancing Cotswold to start your CIS tax refund claim. We are based in London but work online with most CIS clients.
You can also read: What Is a Sole Trader?
