~ Do you work in the construction sector?
~ As a Contractor or a Subcontractor?
~ Are you wondering when you will get your tax refund?
You will find answers to these and other questions below.
Who Contractor and Subcontractor are?
The Contractor, i.e. the Contractor (Principal), is the Company or Person giving you th job.
The Subcontractor, i.e. the Subcontractor, is the Company or the Person working for Contractor.
What CIS tax is and how is it calculated?
It is a tax that the Contractor deducts from your income and he is responsible for paying the CIS tax to HMRC once a month.
* 20% for registered Subcontractors.
* 30% for unregistered Subcontractors.
To register as a subcontractor, just call HMRC Office. You will find the number to the Office here
If you work as a Subcontractor, CIS tax is deducted from each payment.
Sample Your salary is £1,000.
CIS 20% tax is £ 200.
Payable amount to you: £800.
If you are a Contractor and a Subcontractor, you usually do not pay the CIS tax to HMRC because it has already been paid by your Contractor.
Sample: As a Subcontractor, you earned £10,000
£2,000 CIS tax was deducted.
Payable amount: £8,000
You have one Subcontractor who made £2,000.
You deducted £400 CIS tax.
He received £1,600 You do not have to pay anything to the office because the CIS tax of £2,000 has already been collected from your wages CIS and PAYE Return to HMRC will be as follows:
As a Subcontractor, you were deducted £2,000
As a Contractor, you deducted £400
Difference (2,000 - 400) = £1,600 is carried over to the following month.
What is CIS STATEMENT and do we need it?
Each month, our Contractor must give us CIS Statement.
This is a statement of how much we have earned as a Subcontractor and how much CIS tax has been deducted.
It is very important, because on its basis you will then apply for CIS refund.
When will we get a refund of the CIS paid?
Regardless of whether you are Self Employed or Ltd, you receive a CIS refund in the following tax year.
Once the current tax year ends (no earlier than April 6), you can apply for CIS refund. The sooner you do it, the sooner you will get the refund.
You will received a CIS refund within one to eight weeks.