A simple guide to Construction Industry Scheme Tax Rebates

In a few week’s time, those working in construction will enjoy their second Christmas of the year, as, from April 6, it is possible to claim a tax rebate from the HMRC under the CIS Scheme for the 2017/18 tax year.

Here at VW Taxation, I estimate in April alone, we will process over 300 individual tax returns, generating tax rebates of over £600,000 for construction workers across Hampshire!

Although myself and the VW team will be working around the clock to ensure every rebate is maximised and paid quickly, for those new to CIS, here is my 10 point guide on CIS Tax Rebates.

1 – What is the Construction Industry Scheme?

The Construction Industry Scheme was created in 1972 by HMRC for tax from contractors and subcontractors. Basically, HMRC did not trust sub-contractors to pay their tax, and the CIS Scheme ensures it is taken before the individual gets paid.

2 – How does it work?

If you are a self-employed subcontractor, the company you work for deducts a standard rate of 20% from every penny you earn and hands it over each month to the HMRC on your behalf. It then sits in their bank account under your Unique Tax Reference number.

3 – Why do I get a tax rebate?

In the 2017/18 tax period, every UK citizen was allowed to earn £11,500 per year tax-free. Assuming this was all earned under the CIS Scheme, there is 20% of it (£2,300) sitting in the HMRC Bank account with your name on it. You can rightfully ask for this back by completing a Tax Return.

4 – What about the tax I pay on the money I earn over £11,500, do I get some of this back?

If you are able to submit business-related expenses, then you are able to claim a percentage of the tax back, as by doing so, you reduce the amount of profit you made. Simply, less profit, less tax to pay. I’d like to think with years of experience and thousands of Tax Returns under our belt, we are experts at safely maximising the size of their Tax Rebate for our clients – within the confines of the law and ensuring you are paid back what you are rightfully owed!

5 – If my expenses are too high, will I be investigated?

Not always but you increase your chances of being investigated by overclaiming and the Revenue may want to look into your tax return, requesting proof of the expenses. I see it as my job to advise our clients on this and in many years of trading, a few investigations I have been involved with have been resolved amicably.

6 – When do I pay my National Insurance contribution?

The yearly amount is calculated and deducted from the tax rebate before it is paid to you.

7 – How quickly do I receive my tax rebate?

The average last year was just 12 days from submission of the return to payment. This timeframe is dependent on the accuracy of the information we submit. If there is conflicting data from what we submit, to what has been supplied by the companies you have worked for, it can cause a delay. Download our handy Tax Return Checklist to ensure you submit all the correct information. We also have a strict policy of chasing client payments weekly.

8 – How do I become a customer of VW Taxation?

It is a very simple process! We raise a Self Assessment code using our specialist HMRC Agent System. Within 10/14 days you will be sent in the post the code, which you need to pass over to us. This can be done over the phone or on email. Within 24 hours we are then given authorised access to your Tax Account and are able to submit the tax return for you. Any communication with HMRC thereafter is dealt with by us on your behalf… so you can sleep easy knowing you will always hit your tax deadlines!

9 – When can you submit your Tax Return?

For the tax period of 2017/18, the revenue system will start accepting tax returns on 6 April 2018. We will be poised – ready to go!

10 – How and when will you pay me my tax rebate?

On the day we receive your tax rebate, you will receive a phone call or email from us letting you know, and having provided bank details, you will receive the payment minus our fee within 24hours by bank transfer. A full statement of the tax return can be emailed upon request for your records.

Hopefully, we have covered all that you need to know about CIS Tax Returns and Rebates, but if you have any burning questions, you can visit our Frequently Asked Questions section of our website or contact us directly. We are always happy to help!

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