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Why you can claim back CIS tax?

Working under CIS (Construction Industry Scheme) means that the Contractor you are working for deducts CIS tax from your wage each time you are paid; however, these deductions do not take your Tax Free Allowance into consideration.

Everybody in the UK gets a Tax-Free Allowance, for the tax year 2020-2021 it is £12,500. This means that you do not have to pay tax until you have income over £12,500.

But… by working under CIS you have been paying tax on this income and will continue to do so until you submit your Tax Return whereby you can reclaim any overpaid tax. This is to ensure you submit your Tax Return.

For example:

Example One - John Smith is a Labourer, he earned £10,000 in the tax year (6th April 2020 to 5th April 2021). 20% Income Tax was deducted under CIS and he was paid 80% into his bank. 20% - £2,000 was paid to HMRC but as his total income was less than £12,500 so he did not need to pay any tax.

John Smith used Tax2u Ltd to claim his tax rebate and received £2,000 into his bank. He provided all his supporting documents to Tax2u and he only paid £99+VAT for his tax return.

Example Two - Evan Jones (Carpenter) is paid £150 a day and he worked 150 days; his total income was £22,500 for the tax year 5th April 2020 to 6th April 2021. He had 20% Income Tax deducted from his wages, £4,500 and HMRC collected this money and allocated it to Evan’s tax account.

However, as Evan does not pay tax on the first £12,500 that he earned, only on anything above the £12,500. He was paid £10,000 above the Tax-Free Allowance. Evan also had business expenses this tax year of £3,000 (Mobile phone, travel, tools, PPE etc).

When Tax2u deducted Evan’s business expenses from his income of £22,500 it meant he only had an income of £19,500 and only needed to pay tax on £7,000 (£19,500 - £12,500).

His Tax Return looked like this (before National Insurance)

Total Pay £22,500
Less business expenses £3,000
Total profit £19,500
Less tax free allowance - £12,500
Tax to be paid on £7,000
20% of the above £1,400

Even’s tax bill was £1,400 but had already paid £4,500. So, before NI was calculated Evan was due a tax rebate of £3,100.

Tax2u is a registered HMRC tax agent and we are here to help our clients maximise their tax rebate. We have helped thousands of clients reclaim their overpaid tax. Check out our thousands of 5* reviews on Trustpilot, Google and Facebook.

All we need is for you to upload your payslips and supporting documents onto our secure Online Dashboard. To get started click here to open your free Online Dashboard, start uploading your files and be allocated your dedicated Accountant.

The best bit is that we will draft your return for free to find out if you are due tax back or not.

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CIS stands for Construction Industry Scheme, it’s a tax legislation put in place by HMRC to ensure all construction workers pay their tax. Read more

Some Your client or contractor has to deduct CIS tax from your pay each and every time they pay you. They then pay this tax deduction to HMRC who hold it on your account until your submit your tax return. Read more

Everyone in the UK gets a tax free allowance, this is the threshold before you have to pay any tax. However, as your client has already deducted your tax from earnings under the threshold you can claim it back. Read more

If you have earning over the minimum threshold (£12,500 for tax year 20-21) then you can maximise your tax rebate by offsetting your income with business receipts. Read more

The main thing that you need is your CIS deduction certificates, payslips or your bank statements to prove income and tax deducted. Read more

You can claim back your CIS tax on the 6th April each year for the previous tax year. You then have until the 31st Jan (the tax return deadline) to submit your tax return. Read more

To claim back your tax you need to submit your self-assessment tax return. Read more

A CIS deduction certificate is the payslip that your client should give you each and every time you are paid. It will show the Gross, Nett and Tax deducted amounts that tax2u will need to reclaim your tax. Read more

It really couldn’t be simpler, log in or create your free account, upload your CIS deduction certificates / payslips and our accountants will do the rest. Read more



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