Every year we get several enquiries about the Construction Industry Scheme (CIS) and, specifically, how a CIS tax rebate works. If you’ve already started working as a subcontractor, it’s likely you’ll be familiar with all things CIS. For those of you who are newbies, or perhaps you just need a quick refresher, consider this your comprehensive guide to all things CIS tax refunds.
What is the Construction Industry Scheme and why was it introduced?
The Construction Industry Scheme was introduced by the government to minimise tax fraud within the construction industry and ensure construction workers paid what they owed. Contractors who employ subcontractors are therefore obligated to make tax deductions at the source before paying their subcontractors. These deductions are then directly passed on to HMRC.
If you are a subcontractor who carries out construction work, it’s important to note that you’re still responsible for managing your taxes, despite the fact you’ll have deductions taken off as part of the CIS. This means that you’re in charge of making sure any deductions taken are used to offset the outstanding tax and National Insurance (NI) you owe. In some cases, you may even find you’ve overpaid on your taxes – that’s when you’re due a CIS tax rebate.
Remember, it’s not a compulsory requirement to be registered under the CIS but it does offer you benefits to do so. Subcontractors registered under the scheme are taxed at 20% while those who are unregistered are taxed at 30%.
What is a CIS rebate?
When added together, the total deductions taken from your pay over the year might result in an overpayment. This is because, after expenses have been accounted for, the deductions can sometimes surpass the amount of NI and tax due. A CIS rebate, also known as a CIS tax refund, is therefore HMRC refunding you the tax you’ve already paid through your contractor employer the previous tax year.
CIS tax refund eligibility and how to calculate
You can calculate a CIS tax refund while completing your usual self-assessment tax return. Once you’ve reported your total income, allowable expenses and CIS deductions, you will then be able to calculate the total tax amount owed and any refund you are due as a result of overpayment.
Essentially, if the amount you’ve paid in CIS deductions is greater than the amount of tax and NI owed, you will be eligible for a CIS rebate. It’s for this reason that it’s paramount you keep accurate records of all your income sources, expenses, and any other payments made. It will make your life much easier when it comes to tax calculations for the previous tax year. Plus, HMRC could ask you to provide evidence so keeping copies to hand is always a good idea.
Claiming CIS tax rebates
CIS rebates won’t be issued until after HMRC has received and processed your self-assessment tax return – another reason to make sure you always file on time! You’ll be able to track the status of your tax return and pending refunds through your online account.
Getting a CIS tax advisor on board is a great way to make sure you’re submitting all the right information, and that your calculations are correct. One of the biggest reasons for long delays in the refund process is down to inaccuracies. Accountants can also make sure you’ve applied for all the relief you’re eligible for, and that you’re getting the most out of your rebate.
CIS Rebate with Brian Alfred
At Brian Alfred, we are your CIS rebate specialists! Depending on your personal circumstances and the info you provide us with on your form, our services could cost as little as £299 + VAT. Plus, the process for getting your rebate couldn’t be simpler. Here’s how it works:
1 – easy online form
Fill in our easy-to-use online tax refund form with all the relevant details.
2 – call from us
Someone in our CIS rebate team will call you, answer any questions and make sure you’re getting as much out of your rebate as possible.
3 – say yes and relax
Confirm your rebate amount on the online platform, then step back and let us do the rest! You can expect your repayment in as little as two weeks as long as all your info is correct.
Get in touch
Want to know more about how we can help with your tax rebate? Give us a call today!
