If you work in construction as a subcontractor, you may be registered under the Construction Industry Scheme (CIS).
Understanding how CIS deductions work and how to complete your tax return correctly can help ensure you only pay the tax you owe and claim any refund you may be entitled to.
What is CIS?
The Construction Industry Scheme is a HMRC scheme that applies to contractors and subcontractors working in construction.
Contractors deduct tax from payments made to subcontractors and send those deductions directly to HMRC.
How much tax is deducted?
CIS deductions are normally:
- 20% for registered subcontractors.
- 30% for unregistered subcontractors.
These deductions are not always the final amount of tax due and are taken into account when your Self Assessment tax return is prepared.
Do CIS subcontractors need a tax return?
In most cases, yes.
CIS subcontractors generally need to complete an annual Self Assessment tax return showing:
- Total income received.
- CIS deductions suffered.
- Business expenses.
- Taxable profit.
What expenses can be claimed?
Subcontractors may be able to claim allowable business expenses, including:
- Tools and equipment.
- Protective clothing and safety boots.
- Travel to temporary work sites.
- Public liability insurance.
- Accountancy and bookkeeping fees.
- Mobile phone and business-related costs.
Keeping receipts and accurate records is essential to support any claims made.
Can you receive a tax refund?
Many subcontractors have more tax deducted during the year than is ultimately due.
Where CIS deductions exceed the final tax liability, a refund may be available after the Self Assessment return has been submitted.
Keeping good records
Good record keeping makes tax returns easier and helps avoid mistakes.
It is important to keep:
- CIS deduction statements.
- Invoices issued to contractors.
- Business receipts and expenses.
- Bank statements.
How Precision Books can help
Precision Books supports CIS subcontractors with bookkeeping, tax returns and tax refund claims.
We can help ensure CIS deductions are recorded correctly and that all eligible expenses are taken into account when preparing your return.
This article is for general information only and should not be treated as personal tax advice. Individual circumstances vary and professional advice should be obtained where necessary.