Average CIS Tax Rebate. How can I get the most out my claim?


Construction worker? A quick guide to CIS for UK Tradespeople

For all of you self-employed workers in the construction industry it’s well worth brushing up your knowledge around the Construction Industry Scheme (CIS) tax rules.

In a nutshell what this means is that under CIS the contractor that has hired them must legally be withholding tax on their behalf before the self-employed individual is paid. Many self-employed workers in the sector are still unaware of this, meaning they’re declaring their income twice and should therefore receive a rebate from HMRC. There are also certain steps that self-employed construction workers can take to increase that rebate. But do your clients know this?

Average CIS Tax Rebate - What are the CIS rules?

In years gone by, subcontractors were often paid cash in hand. It wasn’t really legal of course, but it happened. And that meant a huge headache for HMRC when it came to chasing the tax.

With that in mind, the government launched the Construction Industry Scheme (CIS) as a more formal way for contractors, subcontractors and other construction workers to pay their income tax.

Follow the below link to a handy HMRC guide

Construction Industry Scheme: a guide for contractors and subcontractors (CIS 340) - GOV.UK (www.gov.uk)

Is my trade included under CIS?

As long as you work somewhere in the construction or labouring sector and isn’t full time employed they’re entitled to use the CIS scheme. This includes:

  • Builders
  • Bricklayers
  • Painters
  • Plasterers
  • Carpenters
  • Demolition experts

This isn’t an exhaustive list, therefore if any of you are self-employed construction workers of any kind you should be encouraged to check with your contractor to confirm their eligibility.

What’s the biggest benefit to registering for CIS?

The most notable benefit is that you will pay less tax - 20% will be deducted from your salary instead of the 30% that those who aren’t registered for CIS must pay. Unless you earn more than £50,270 per year, this exceeds what they owe in tax, hence the overpayment and subsequent rebate.

It’s also worth mentioning that some contractors will not let subcontractors onto a site without them being registered for CIS beforehand.

You can reclaim their overpayment by completing a year-end tax return in the normal way, and of course that is where we come in. Simply click CLAIM NOW on this site and we will formulate your tax return and rebate claim for you.

What are allowable expenses under CIS?

Under CIS there are certain allowable expenses. It is essential to maximise these and not leave anything out as the more expense equals the less taxable profit, which means a higher average CIS tax rebate. They include:

  • Staff costs: Salaries/wages, pensions, subcontracted labour, employers’ NICs, staff/employee benefits, employment agency fees
  • Professionals’ fees, for example money paid to surveyors, solicitors and accountants
  • Costs relating to carrying out work away from home. For example, travel fares, food and accommodation
  • Business-related tools, equipment or other consumables
  • Raw materials and production costs
  • Subscriptions paid to a Trade Union
  • Payments made to subcontractors where tax has not been deducted
  • Costs relating to administration and running an office: office supplies, internet/landline costs, printing, computer software, postage etc.
  • Subscriptions to professional journals in the field, or to professional bodies
  • Vehicle costs, for example insurance, fuel, breakdown membership, repairs, servicing, MOTs and parking
  • Financial overheads: Business insurance, bank, credit or overdraft charges, loan interest payments or any other financial commitments
  • Business premises repairs and maintenance repairs
  • Utilities costs: Rent, insurance, gas, electricity, security, insurance. If working from home, it must be clear how long it’s actually used for business purposes
  • Advertising costs, for example sending out samples or paying for a newspaper ad.

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What is not classed as an allowance expense under CIS?

Under CIS, you will not be able to claim for:

  • Work carried out that was separate to the business
  • Anything purchased specifically for private use
  • Legal fees that relate large purchases such as property
  • Personal travel, for example between home and work
  • The purchase of vehicles
  • Hospitality, events or entertaining
  • Loan, overdraft or financing repayments
  • Charitable donations or payments made to clubs or political parties
  • Any recoverable costs relating to insurance claims
  • Legal costs and fees in relation to illegal actions, fines or disputes
  • Bad debts that are not included in turnover, or any debt relating to a fixed asset
  • Personal utility costs
  • Ordinary clothing even if there is a dress code (but not uniform)
  • The depreciation of stock, equipment or other assets
  • Costs relating to the maintenance or extension of buildings
  • Repair of any non-business related premises
  • Rent or mortgage payments for their private home
  • Everyday food and beverages (unless classed as business expenses due to working away from home)

So how is it possible for me to increase my average CIS tax rebate?

There are several things you can do here, and the most obvious one is claiming all your expenses. Too many people are over-cautious when it comes to knowing every single business expense they can claim, which is why it’s important to know what you can include. Don’t  miss off expenses you are perfectly entitled to claim back from HMRC.

For instance (and this is a common one), as previously mentioned you may well be able to reclaim certain expenses incurred when working from home. It’s simply a case of apportioning household costs to actual working hours – if this feels like a headache to you, don’t worry simply send us an email and we will advise you.




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