CIS RETURNS in Farnham How does the CIS Scheme work? The Construction Industry Scheme (CIS) is a tax deduction scheme that applies to payments made by contractors to subcontractors for construction work in the UK. The system is administered by HM Revenue and Customs (HMRC). It is designed to ensure that subcontractors pay the correct amount of tax and National Insurance contributions (NICs) on their earnings from construction work.
Under the CIS, contractors are required to deduct money from payments to subcontractors at a rate of either 20% (for subcontractors who are registered with HMRC under the scheme) or 30% (for subcontractors who are not registered). These deductions are treated as advance payments of tax and NICs, and the subcontractor must declare and pay any additional tax and NICs due on their self-assessment tax return.
To participate in the CIS, subcontractors must register with HMRC and provide their unique taxpayer reference (UTR) to contractors. Contractors must also register with HMRC and report monthly payments made to subcontractors using the CIS returns in Farnham.
How much CIS tax will I get back?
The amount of CIS tax you will receive depends on several factors, including the amount of tax you paid during the tax year, your income level, and any tax credits or deductions you are eligible for.
To determine the amount of CIS tax you will receive, you must complete a tax return and submit it to the UK tax authorities (HM Revenue and Customs). Your tax return will calculate your tax liability based on your income and any allowable expenses or deductions, and any excess tax you have paid will be refunded.
The CIS can be a complex area of tax law, and contractors and subcontractors may seek professional advice to ensure compliance with the scheme. If you need any help regarding CIS returns in Farnham contact us.