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If you work as a subcontractor in the world of construction, then you’re probably aware of the tax you’ve paid as part of the Construction Industry Scheme (CIS).

However, you might not be aware that you could be eligible for a rebate due to paying too much tax under CIS.

Want to find out if you’re owed money? We’ve put together this no-nonsense guide to help you get hold of any cash that might belong to you.

 

What work is covered under CIS?
CIS applies to contractors and subcontractors in most areas of construction. There are certain exclusions, such as carpet fitters and architects—you can take a look at the full list here.

 

Is CIS classed as being self-employed?
As subcontractors in construction aren’t employed under PAYE rules, you are classed as self-employed. That means it’s up to you to fill out your tax return and file your accounts.

CIS differs from regular self-employment in one fundamental way, though. As CIS is essentially a way of putting an end to ‘cash in hand’ work, it means contractors deduct the tax from subcontractors fees and pay it over to HMRC. It reduces paperwork for subcontractors, and it ensures the government is getting its share of your earnings.

 

How much tax do I pay on CIS?

There are three rates of CIS tax deduction:

  • Sometimes there is a 0% tax deduction—but you’ll need to meet certain qualifying conditions and prove these to HMRC (you can find out more about this here)
  • The most common payment is 20% of gross, this is for CIS-registered, smaller subcontractors
  • A 30% rate is applied if you’re not registered with HMRC, or if they can’t find your record

 

What are CIS tax rebates?
Often with CIS, too much tax is deducted. This is simply because contractors, generally speaking, will remove a flat 20% from anything they pay to subcontractors. This isn’t contractors being greedy, though. They need that money to pass on to HMRC, who demand that percentage as part of CIS.

Now, if every worker on every site fitted exactly with HMRC’s calculations, then that 20% payment would be the right amount. However, individual subcontractors will fluctuate in their earnings across the year. As such, they usually end up paying too much tax.

To get that money back, subcontractors are required to go through an application process with HMRC. The resulting payment is known as a CIS tax rebate.

 

How do I claim for a CIS tax rebate?
So, you’ve realised that you might be eligible for a tax rebate under CIS. How do you go about getting your money?

Here are the two routes you can take:

  • Do it yourself through HMRC
    As you’d imagine, this approach requires time, patience, and paperwork. You’ll need a list of the sites you’ve worked on, your CIS statements from your contractor (these are often given in the form of payslips), and other paperwork such as proof of address. Then, you’ll need to apply for the rebate via HMRC’s online portal. This will require the inputting of your payment data and proof of paperwork.
  • Appoint an agent to act on your behalf
    Many subcontractors use a third-party agency, such as Brian Alfred, to get their CIS tax rebate. It’s not hard to see why. These types of agencies can maximise your refund, and they’ll get the money to you faster. How do they do this? By employing expert finance professionals who know the finer details of CIS tax issues. In the case of Brian Alfred, they’re so confident of getting you a rebate that there’s no fee if you don’t end up qualifying for payment.

 

How long will it take to get my rebate?
If you go down the HMRC route, it could take up to ten weeks to get the money you’re owed back into your account.

If you decide to bring in an expert agent, your rebate could be paid in as little as 24 hours. How? Once your case has been accepted, the agency will pay you upfront meaning that they wait on the HMRC payment instead of you.

 

Where can I find more information?
You can find the government’s official CIS guide here (stick the kettle on, it’s a big read!). For more information on Brian Alfred, take a look at their company profile here.

And if you’re looking for more advice and tips on running your own business, have a browse through our list of resources.

 

Other guides you may find interesting:

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