If you are director of a limited company and on the payroll taking a salary which you are taxed on, does the limited company still have to pay CIS tax as a contractor and subcontractor? A company supplying and fitting windows, it's just a sole trader currently. At the minute he has CIS tax taken off the fitting part of the sales invoice, I wondered if this would be different if it was a limited company.
No different as a limited company - CIS still would be deducted unless you have been granted gross payment status, which you can apply for as a sole trader or a Ltd co. Minimum turnover to apply for gross payment status is £30,000.
The main difference would be that the CIS deducted can be offset against the PAYE due each month, and any not used up in that way gets refunded (on request) at the end of the tax year - unless there is corporation tax outstanding, in which case it's offset against that.
Hi Helen, thanks for your reply much appreciated, I was asked about this today and I had no idea and no idea how to even google it. So thanks very much
Just to clarify, CIS tax is deducted from ANY work done on a property where a contractor/sub-contractor relationship is in existence. The only time this would not apply is if the customer was a private individual or was not classified as a contractor within the CIS. Note though that if a business with other concerns (i.e. not specifically intending to operate within construction) but has an average construction spend of £1m or more over 3 years, is deemed as a contractor for CIS purposes.
Also note that "construction" is a generic term for ALL building related projects including renovations, extensions, landscaping (in relation to new build properties), painting and decorating, electrical, plumbing etc etc.
