The tax office has a comprehensive set of rules and regulations that cover the employment status of all self-employed sub-contractors registered under the Construction Industry Scheme. To maximize your CIS tax rebate, you need to make sure that you include all eligible expenses when filing your tax return. Doing so can help ensure that you get back as much of your hard-earned money as possible.
What expenses can be claimed back?
It’s important for CIS subcontractors to know what business expenses can be deducted from their taxes. These expenses, detailed below, are generally accepted as legitimate tax write-offs for this type of contractor.
Employers have to pay national insurance contributions (NICs) for their staff, as well as accounting for subcontractor labour and any benefits provided to employees. Salaries, wages, pensions and fees paid to employment agencies must also be taken into account.
The fees of professional services, such as those provided by architects, accountants, solicitors and surveyors, are included in the overall costs.
Employees travelling on approved business trips may be able to claim expenses related to travel, including airfare, bus fare, taxi fares and train tickets. They may also be able to claim costs associated with renting or using a private car/van, including parking fees, fuel, roadside assistance membership fees, repair costs and insurance premiums. Other possible claims include meals and accommodation when away from home as well as vehicle licensing charges.
- You can also claim back office supplies such as stationery, office necessities, software, printing, phones, and broadband.
- Materials for work, tools and PPE
- Uniform costs and the cost to wash them
- Maintenance repairs to equipment, and small consumables (some equipment, tools).
When submitting a tax return, it’s best to double-check the allowance status of any expenses beforehand to avoid penalties and repayment of possible CIS tax rebates. By taking this precautionary measure before you file your return. If you are using the Subbie Tax app, you can message your dedicated accountant and ask them any questions you may have.
What does dual purpose mean for my CIS tax return?
When an item serves dual purpose, meaning it is utilized for both business and personal use, its associated cost can be claimed as a business expense in proportion to its use for business.
For those who use their own vehicle for both business and personal purposes, the situation can be a bit tricky. If you’re using your vehicle to attend temporary job sites during the workweek and also driving it on the weekend for personal errands, you should not include any of this personal mileage in your expenses when submitting your tax return.
What thing should I not put on my CIS tax return?
When claiming business expenses, only those that are necessary for the running of the business are eligible for inclusion on your return. HMRC does not allow for any personal expenses or those considered a capital asset to be claimed. Care must be taken to correctly identify what is and what is not an approved expense when submitting your claims.
Businesses can benefit from tax relief by making claims for capital allowances on assets purchased. For example, if a business purchases machinery or equipment, they are eligible to receive capital allowances through the Self Assessment tax return process. HMRC offers this valuable tax relief opportunity; however, it is important to remember that it must be claimed separately within your return.
What supporting evidence or documents do I need for my CIS tax return?
Different types of work expenses have specific requirements for support documentation. Generally, the business should retain the same documents and records it regularly maintains in managing day-to-day operations. This includes documents such as receipts, invoices and other papers.
Organizations need to create, maintain and store records in either paper or electronic form, as well as a backup of those records. It’s important that these records are kept for at least 6 years.
- Bank statements
- CIS statements of earnings
- CIS tax return and other income
- Mileage log books
You also need to include any other forms of income:
- PAYE income as an employee.
- Investment income.
- Bank or building society interest.
- Rental income if you are landlord.
The more legitimate expenses you claim, the smaller your tax bill will be. When you have completed your tax return, it is important to review your tax calculation before submitting your return to make sure that you have included all of your income and expenses.