The construction industry scheme, known as the Construction Industry Scheme (CIS), allows eligible contractors to claim a tax rebate based on the value of work carried out over a period of up to three years. This includes building extensions, refurbishments and maintenance works.
There are many different types of qualifying work, including public sector projects such as schools and hospitals. However, there are also some exemptions to the CIS rules, including the following:
• Projects involving alterations to existing buildings
• Work done within the home
• Small scale domestic improvements
• Non-residential commercial property work
• Works undertaken by sole traders or partnerships
In this article, we look at how to claim a CIS Tax Refund
The CIS Scheme allows eligible businesses to reclaim the cost of certain goods and services purchased during the previous calendar year. This includes purchases made by employees, contractors, agents and suppliers. Businesses must meet specific criteria in order to qualify for reimbursement under the CIS Scheme. To find out whether your business meets the requirements, please refer to our CIS guide here.
If your business does not qualify for the CIS Scheme, you are still entitled to make a claim for a refund. However, the amount you receive will depend on your individual circumstances. You will need to provide evidence to show why you are claiming a refund. If you don’t know where to start, you can use our CIS refund calculator to work out what you’re owed.
You can also contact us directly via email or phone. We’ll help you work out what you owe and how to claim it.
What is the CIS Scheme?
The CIS Scheme is a tax relief scheme for contractors working in the UK. It allows you to reduce the amount of income tax you pay on profits earned overseas. This is because it treats foreign earnings like domestic earnings. You are able to claim up to £50,000 each year. This includes money earned abroad and interest received on investments.
You do not need to be resident in the UK to take advantage of this scheme. However, you cannot use the CIS scheme to avoid paying tax on dividends or capital gains. If you want to make sure that you don’t lose out on tax, you should consider registering as a contractor.
Who can participate in the CIS system?
The Common Information System (CIS), introduced in April 2017, requires contractors working in the UK to pay corporation tax based on their annual earnings. This includes subcontractors who work on buildings worth more than £1 million. If you qualify, you must register with HMRC within 28 days of starting work. Failure to do so could lead to fines of up to £10,000 per day.
What if your business is outside the UK?
The United Kingdom is one of the most popular places for expats to live, work, study, and retire. But what happens if your company isn’t based there? What if you don’t pay taxes in the UK? And how do you report your UK earnings?
For example, let’s say you run a small online retailer based out of London. You sell products like clothing, electronics, and books. Your customers are located around the world. You ship everything from Amazon FBA warehouses, where it’s stored until it ships to customers.
You’ve been working remotely for three months now, and you just got promoted to manager. You start earning a salary of £50K GBP per year ($66,856 USD). How much money do you owe the British government?
Income Tax Rates In The UK
If you earn less than about $100,000 GBP annually (about $132,500 USD), you won’t have to pay income tax in the UK.
But if you make over about $100,000GBP ($132,500USD) a year, you’ll likely have to file a self-assessment tax return. This is because you’ll be considered a resident of the UK.
Residents of the UK are taxed on their worldwide income. So even though you’re living abroad, you still owe the same amount of tax as someone living in the UK.
How do you sign up for the CIS?
Registering for CIS is free and there are no penalties for sole traders. However, subcontractors who do not register for CIS risk having their taxes increased. If you’re a sole trader, it makes sense to consider registering for CIS.
How can expenses be deducted from taxes?
If you want to reduce your taxable income, there are some ways to do it. One way is to deduct certain expenses incurred during the course of your job. If you are self-employed, you can deduct expenses such as vehicle mileage, office costs, plant & equipment, clothing, insurance premiums, and accounting fees. You must keep good records to substantiate these deductions.
You can also take advantage of the tax credit offered to contractors
What documentation is required to submit a claim for a CIS tax refund?
The Canadian government offers refunds for overpayments of income taxes. If you are eligible, you can file a claim within three years of paying the extra amount. You must prove that you paid too much tax and that it wasn’t due to negligence or willful disregard. To qualify for a refund, you’ll need to provide proof of payment. This includes bank statements showing the original source of funds, invoices, receipts, cancelled cheques, etc.
If you don’t know what records to keep, here’s a list of things you might want to save:
• Original forms used to pay your taxes
• Payment stubs
• Bank statement(s)
• Cancelled check(s)
• Copies of your W2s
• Any supporting documentation such as sales slips, contracts, etc.
How can you make a CIS tax refund claim?
The CIS returns are due to be filed by April 15th. If you haven’t already done it, make sure you complete the online form and send it off. If you’re a sole trader or partner, you don’t need to file a self-assessment tax return. But if you’re a limited company, you must file a corporation tax return and provide an earnings per share figure. And if you’ve got some outstanding CIS deductions, you need to inform HM Revenue & Customs about them.
If you’re claiming a CIS tax refund, you’ll need to prove that you paid no income tax during the relevant period. You can use either invoices or receipts.
You’ll also need to show that you didn’t receive any interest payments during the relevant period. For example, if you received interest on a loan, you’d need to include a copy of the bank statement showing the interest payment.
And finally, you’ll have to prove that you had no capital gains during the relevant period. So, for example, if you sold shares in a company, you’d have to include proof such as the stock transfer document.
If you‘ve got any outstanding CIS deductions, you’ll want to tell HM Revenue & Customs about those too. They won’t automatically be deducted from your tax bill.
But if you’re claiming an overpayment, you might be able to carry the amount forward into the following tax year. So if you’re expecting a large CIS refund, you could reduce the amount you owe for the current tax year.
To find out how much you can carry forward, you’ll first need to work out what you’ve actually earned during the previous tax year. To do that, you’ll calculate your average taxable profits. These are calculated by dividing the total amount of profit you earned during the year by 12 months.
Use taxback.co.uk to submit a request for a CIS Tax Refund.
Do you want to know how much money you could save by claiming back taxes owed to the UK government? If yes, read our guide on how to apply for a CIS refund with taxback.co.uk.
The Common Information Set (CIS) allows taxpayers to submit information about themselves online to HM Revenue & Customs (HMRC). This includes things like bank account details, National Insurance numbers, etc. However, there are some limitations on what you can do with this data. For example, you cannot use it to open accounts or make purchases. You can still use it to apply for a job though.
In addition, the CIS does not allow you to change your name or address. Therefore, if you move house, you will have to start again.
Frequently Asked Questions
Does my self-assessment tax return count toward the CIS Tax Refund?
If you’re a UK resident working in another EU member state, you might want to consider claiming a European Union citizen’s tax refund. This includes those living in Ireland, Sweden, Denmark, Finland, Norway, Iceland, Liechtenstein, Monaco, San Marino, Switzerland, Andorra, Vatican City, Canada, Israel, Australia and New Zealand.
The process is simple. You just need to provide us with some basic information about yourself, such as your name, address, date of birth and nationality. From there, our team of experts will calculate how much money you are entitled to receive. Once we’ve done that, we’ll file your tax return for you. Then, once you’ve received your tax refund, we’ll take care of everything else – like paying your tax bill and sending you a cheque.
If I applied for a government loan program, am I still eligible to receive a CIS refund?
The self employment income support scheme (SEIS) is designed to help people start earning again in the wake of coronavirus lockdowns. As part of the scheme, anyone who earns less than £16,250 per annum can apply for a loan of up to £2,500 to cover living costs while they earn up to £5,000 a month.
Anyone who gets a government loan will receive a tax rebate of around £1,400. But there are some important things to know about claiming a CIS refund if you got one. You’ll want to check whether you qualify for it because you could miss out on the maximum amount of tax relief.
You might also be able to claim a refund if you’ve already paid tax on your earnings. If you did pay CIS tax on your earnings, you’ll get a refund if you meet the following criteria:
• Your gross salary was less than £16,200 in 2018/2019.
• You earned less than £5,000 in 2017/2018.
• You didn’t work for six months in either of those years.
If you do qualify for a CIS refund, you’ll get it back within three months of applying. So if you get a government loan, you’ll probably get a refund anyway.