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How to maximise your CIS tax rebate?

Under the Construction Industry Scheme (CIS), your tax is deducted from your pay in advance (at 20%, or 30% Emergency Tax if your UTR has not been CIS-activated).

If you are eligible, you make a claim for a tax rebate for any tax that you have overpaid at the end of the financial year in April. Your claim will take the Personal Allowance into account (that is the first £12,500 of pay).

HMRC give you the opportunity to claim tax relief for anything you bought to use wholly and exclusively for your business during the financial year.

Work related expenses are TAX DEDUCTIBLE which is not the same as being refunded. You can claim a tax deduction on most work expenses.

If you are earning more than the £12,500 tax threshold, then you can use your expenses to offset the amount of tax you’ve paid through the CIS and maximise the rebate that you are due.

The more legitimate expenses you can claim, the higher your rebate will be. By keeping hold of receipts and records for all your expenses, you will be able to correctly calculate the amount that you are eligible for.

Put simply, the more genuine expenses you can legitimately claim, the higher your rebate will be. Realistically, your expenses should amount to no more than around 10% of your total income for the year.

So what can you claim as a business expense:

As you might expect, things like your dry-cleaning and groceries do not cut it when it comes to HMRC’s list of allowable expenses.

The rules say that your expenses must be “necessary and wholly incurred for the running of your business”. So no, your monthly haircut will not make the cut either.

Really, you are looking at things that you use exclusively for work, such as:

Products

Tangible items like protective attire, safety helmets, reflective vests or uniforms, and tools and safety equipment, plus cleaning products and parts for repairs.

Stock

Products and items you buy to then sell on, or raw materials that you buy to use for your job, plus the production costs that go into the goods you sell.

Subscriptions

Things like bank charges, Trade Association memberships, Accountancy fees (including Tax2u) and Builders’ Liability Insurance.

Transport

We are talking train tickets, bus fares and even miles driven in your own vehicle. Say for instance that you use your car or van for work 75% of the time, you can claim back 75% of leasing payments, fuel, car insurance and road tax.

We recommend that you keep a travel log to note the dates and the location (postal codes) you have travelled to and from.

If you travel to at least 2 locations throughout the tax year you may claim for mileage (45p for the first 10,000 miles and 25p for anything over 10,001 miles).

Subsistence

This is valid, only when you travel outside of the regular “home to work” commute and you need to stay overnight. You can claim for accommodation and the coffees and lunches that you buy while out working (e.g. at a client’s building or when having to work away from home).

So long as you keep records and receipts for your tax-deductible expenses, we can include them in your rebate claim when we submit your tax return at the end of the year.

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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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