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K1ngD


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CIS query
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Hello,

I've been in the construction game for several years now and I've recently taken on a self employed person to help me handle the work load.

All this time, the contractors have paid my CIS - which is the 20%. I'm now confused as how to how it translates to paying my lad. Say I invoice £1000 to the contractor, and they pay my CIS, giving me £800. My lad invoices me £300 which then I pay him £240 - which is already from CIS deducted money. Isn't this being taxed at a 40% rate now? Am I doing something wrong here or am I genuinely out of pocket on this portion? Or do I get the missing extra money back at the end of the year?

Whats the method that's required to avoid this if there is one?

Many thanks.



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Artois


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What you are doing is correct, the CIS tax that you are having deducted by the Contractors is still in effect your money, at the end of the tax year this will either go towards paying your tax bill or result in a refund, the only way around this would be to apply for 'gross status' for CIS. 



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Doug

These are only my opinions of how I see things and therefore should not be taken as advice
Leger


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Artois wrote:

 

What you are doing is correct, the CIS tax that you are having deducted by the Contractors is still in effect your money, at the end of the tax year this will either go towards paying your tax bill or result in a refund, the only way around this would be to apply for 'gross status' for CIS. 

Morning Doug

Or become a Ltd Company in which case you can offset it.



-- Edited by Leger on Tuesday 9th of August 2022 11:49:02 AM

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John 

 

 

 Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
Artois


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Leger wrote:
Artois wrote:

 

What you are doing is correct, the CIS tax that you are having deducted by the Contractors is still in effect your money, at the end of the tax year this will either go towards paying your tax bill or result in a refund, the only way around this would be to apply for 'gross status' for CIS. 

Morning Doug

Or become a Ltd Company in which case you can offset it.



-- Edited by Leger on Tuesday 9th of August 2022 11:49:02 AM

 Hi John, How's things?

Yes forming a Ltd Company would be another option



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Doug

These are only my opinions of how I see things and therefore should not be taken as advice
Leger


Master Book-keeper

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Artois wrote:
 Hi John, How's things?

 Good thanks Doug.  I miss the camaraderie on here though. 



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John 

 

 

 Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
Fast Eddie


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Well, you are thinking you are £60 down on this set of transactions?  But on the £700 profit you made on this you owe £140 in income tax, you've paid £200 of course CIS so you'd be getting £60 refund on this little lot. Which puts you in the correct position (£700 less 20% = £560). Of course there will be a whole load of ins and outs at the end of the year but often it helps just to think of it like this, in isolation, to understand the workings.



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