Cis

[uksparks]

Hi,

ok im either stupid or something but did a days work for someone last month and a few days for someone else, we agreed a price per day and now they are coming to pay me they are saying they must knock 20% off and want my UTR number etc...

I said on your bike, you pay me the full invoice amount you con artist, etc etc...

anyway after then speaking with HMRC about this, they said by law they have to deduct 20% if taking on sub contractors with a UTR number and registered with CIS or 30% if the sub is not registered.

i have now registered on the CIS thing to resolve this, but who in the right mind would ever possibly sub out to someone to lose 20% of the agreed amount to the tax man which you have to mess around with at the end of the year to reclaim.

what a flaming nonsense, so the £450 I was hoping to get from one is now £360 or whatever it works out at, it's such a joke.

so if anyone wants me to work for them as a sub, my day rate is £225, why the hell should I say I'll work for so much a day to lose a wedge of it and potentially have to wait 12 months to get it back from HMRC.

how can you possibly say I'll work for so much per day which you rely and be happy to wait to offset or reclaim the balance.

I will only now work directly for the end customer, HMRC also said be aware that if you sub out to ANYONE you will lose 20%, and they said kitchen fitters etc.

NEVER AGAIN..... NEVER!!

 

[Leesparkykent]

standard business mate no one likes paying tax! how was you paying your contribution before without a UTR number?
you would loose 20% if you paid the tax on the profit anyway,all that has happend is they've stopped it at source and stops the hastle of you doing it.

 

[uksparks]

standard business mate no one likes paying tax! how was you paying your contribution before without a UTR number?

I have a limited business which I am an employee on PAYE, I'm not self employed or do self assessment etc.

I only take the absolute minimum salary to avoid paying any tax, or should I say the absolute minimum I can get away with.

 

[uksparks]

Sorry, just to add its approx £110 a week I pay myself, about £450 per month, that's just to keep on the right side of the NI contributions and pay no tax.

 

[Octopus]

If it's maintenance work it's not subject to CIS

 

[Octopus]

Sorry, just to add its approx £110 a week I pay myself, about £450 per month, that's just to keep on the right side of the NI contributions and pay no tax.

Why so little?

 

[uksparks]

Id rather not go into the finer points of it but I don't need to take a salary is the easy answer., so take the min I can and leave the rest in the bank. Ive been living on savings for the last two years, I'll probably start taking a proper salary in a couple of months, I should remove the money from the business.

 

[Leesparkykent]

if you are LTD under CIS you should still be stopped 20% at source if working as a subbie all that happens is the 20% you have been stopped gets offset against your companies profit (corporation tax).

 

[uksparks]

If it's maintenance work it's not subject to CIS

I did not realise that, I just find it off that I was never told about this CIS thing, neither of them mentioned it and then they have the cheek to deduct it. If I want to take a salary, I'll pay tax and sort it out myself.

 

[uksparks]

if you are LTD under CIS you should still be stopped 20% at source if working as a subbie all that happens is the 20% you have been stopped gets offset against your companies profit.

I had never subbed out before, well not officially.

if I do it again it will be a case of the invoice consisting of zero labour and a £200 rubber grommet.

 

[netblindpaul]

CIS is only deductible at source, IF the work comes under CIS.
As has been suggested already, maintenance work is not under CIS.

IF you check with HMRC & explain what work you were doing, then they can confirm that the work is not under CIS.
This is all detailed on the HMRC website if you can find it.

 

[Leesparkykent]

if you had a subbie working for you, you would have to take the tax off at source under CIS as its the law.

 

[uksparks]

I asked HMRC about it and said it was new electrical installation work and they said it is under CIS.

i have only ever worked for myself so never come across this before.

 

[uksparks]

if you had a subbie working for you, you would have to take the tax off at source under CIS as its the law.

Usually they are all crap so will not be taking anyone on.

 

[Leesparkykent]

i know what you mean. But the way i see it is you either get it stopped at source as it should be or you end up paying it in corporation tax any way. As the same money will more than likely end up as profit in your ltd company accounts some way or other so your not really loosing anything.

 

[Octopus]

When it's stopped make dam sure you get paperwork to confirm the deduction or you could pay twice!

 

[uksparks]

I understand why it's done but when you didn't know about it then have it deducted it's a joke.

not only that if you were to rely on so much per day to live on, it's not exactly going to help.

 

[uksparks]

When it's stopped make dam sure you get paperwork to confirm the deduction or you could pay twice!

Mill be on at them for this, I understand I meant to get it within 30 days.

 

[netblindpaul]

Check the CIS manual CIS340.
Look at Appendix A15 A23, A39 & A40.
Not all work done by electricians comes under CIS.

 

[uksparks]

So if I invoice someone I subbed to, do I show the full amount or one 20% less?

 

[uksparks]

Check the CIS manual CIS340.
Look at Appendix A15 A23, A39 & A40.
Not all work done by electricians comes under CIS.

Thanks, I'll take a look into it.

 

[R G]

You should have gone through this before you started working for the guy, basically he is the contractor and you are the sub contractor , If you supplied materials or had expenses then these could be taken into account before tax deductions , make sure you gat a statement from him stating the deductions at the end of the month, or as you go along , this is then retained until the end of your tax year ..

 

[uksparks]

The joke of it is, I only did 1 day for one and three days for another.

i am sure you can see it from my point of view, I send him an invoice from my business, his business should pay it, then if my business wishes to pay its employees then it will pay the tax at that time.

ive just looked at that document thanks.

 

[uksparks]

You should have gone through this before you started working for the guy, basically he is the contractor and you are the sub contractor , If you supplied materials or had expenses then these could be taken into account before tax deductions , make sure you gat a statement from him stating the deductions at the end of the month, or as you go along , this is then retained until the end of your tax year ..

i would have if I knew anything about it.

 

[Leesparkykent]

So if I invoice someone I subbed to, do I show the full amount or one 20% less?

you put the full amount then show the cost of material used on the job your invoicing for and subtract this and put this on the invoice. then minus 20% tax on this figure you've subtracted your costs, leaving you with what you will get paid.

 

[uksparks]

I'll just put my rate up to a stupid figure so I get the amount that I want else it's not worth it as I can charge my time out at £200 a day all day long so to sub out to someone for £150 then lose 20% off that, it's hardly worth while.

 

[R G]

Bear in mind you would also have to do the same if you subbed out somme of your work to anybody else , you would have to be the tax collector and do the same , these are the rules we have all had to live by for many years ....

 

[Deleted member 26818]

The CIS scheme has been about for some time.
Basically HMRC was ****ed off that tradesmen would do work and then not declare it for tax.
So they decided to deduct 20% at source just the same as would happen if you were an employee.
when you or your company files it's tax return at the end of the year, you just list the Tax already paid to offset any liability.
If your liability is zero, then you should receive a rebate on the tax paid.

 

[Leesparkykent]

i dont understand really. you sub to some one and they stop the tax for you. you do a job for a customer as a contractor not as a subbie you get paid full amount but still should be putting the tax on the profit to one side for when you or your company have to pay your tax bill. so either way you havent lost any more money in tax.

 

[uksparks]

i dont understand really. you sub to some one and they stop the tax for you. you do a job for a customer as a contractor not as a subbie you get paid full amount but still should be putting the tax on the profit to one side for when you or your company have to pay your tax bill. so either way you havent lost any more money in tax.

It really depends how you want to run your company and how much money you have in your company to carry forward each year that is classed as directors capital input that you can then take out tax free etc.

I don't want to go into the finer details of my business, but at least I am now aware of the CIS issue.

 

[R G]

I subbed to a DNO for many years and always had 20% deducted , at the end of the year you give all the deductions in and its then taken into account , if you're paying yourself below your tax threshold then this money comes back to you as a rebate , because you're a Ltd company same as I am , you still pay your corporation tax as usual , I considered it as money set aside which I got back , about 4 months after your year end , and also a little help towards your corporation tax , so you have not lost money ..

 

[Deleted member 26818]

If you have registered you Ltd Company for CIS, you will now need to complete a form each month listing everyone that you employ, even if you don't actually employ anyone that month.
If you employ yourself, then you will have to list your self, and you will also as an individual sign up for CIS, so as your LTD company can then verify that you are registered for CIS.
Might be an idea to de-register your LTD company as soon as before you start getting into trouble.
A late return attracts a £100 fine each month it is not submitted.

 

[Leesparkykent]

or go see your accountant asap

 

[uksparks]

It's ok, I've registered as a sub contractor only, not a contractor as I'm not interested in people working for me, too much hassle, so no need to do the monthly returns.

 

[Deleted member 26818]

You registered your self or your Ltd company?

 

[uksparks]

I registered the limited company as a sub contractor not myself, it took about 10 phone calls to HMRC through their stupid phone systems to sort it out.

 

[D Skelton]

What's your annual profit before material costs? If it's over £35k (it was set at around this figure when I registered my company) then you should be eligible to apply for gross status. Ergo sum... No 20% deduction.

Makes life a lot easier.

I once had a couple of subbies whinging at me for exactly the same reason you are. They tried increasing their price to cover the 'loss'. I paid them their original invoice minus the 20% on labour and told them "it's tax you would have paid anyway, you're just paying it now instead of at the end of the year. It's the law, and if you don't like it, take it up with HMRC."

I wouldn't worry about it, come the end of the year your corporation tax bill will be £90 lower.

 

[uksparks]

Well I'm going to look at that option for the gross payment status, I'll have to look at the figures.

i guess it's all a learning curve, it's a lot easier just working for yourself on your own in your own little world without anyone else.

 

[D Skelton]

Only two things are certain in this life; death and taxes. CIS just makes the latter even more certain for construction industry workers.

It's absolute boll*cks but it is what it is.

 

[R G]

Its even worse for those who are not Ltd and do work through agencies with the NI contributions as well , and the umbrella company as well , consider yourself fortunate its just 20% tax deductions ..

 

[Deleted member 26818]

I registered the limited company as a sub contractor not myself, it took about 10 phone calls to HMRC through their stupid phone systems to sort it out.

So your Ltd company is a sub contractor, employing yourself under CIS, but you are not registered.

 

[D Skelton]

So your Ltd company is a sub contractor, employing yourself under CIS, but you are not registered.

No, he has already clearly explained that he is a director taking a minimum salary as a company employee. His company is registered as a subcontractor though.

 

[Anthony S]

Anyone or any company, limited or not that works in the construction industry and works for another construction contractor in the construction industry will get 20% or 30% stopped at source unless you register for Gross payment and then you have meet a criteria like D Skelton states.

That as be the normal process for a few years now and going limited saves you any NI you are liable for.

Iv'e been limited for years and still have a personal UTR so can work as a sole trader or as a paye through my limited company.

Best to have the 2 options at hand, directors and their limited companies have to submit real time submissions to the HMRC now, so you take a wage and at the end of the year get paid in company Dividends.

With offsetting any CIS deductions suffered against your Corporation Tax bill you have to put it in writing to HMRC because the Corporation department don't ask the CIS department. Otherwise you just wait for a rebate but still have to pay the Corporation Tax bill in the mean time.

Its all simple and straight forward and things self employed/ limited people should know.

 

[HappyHippyDad]

Well I'm going to look at that option for the gross payment status, I'll have to look at the figures.

i guess it's all a learning curve, it's a lot easier just working for yourself on your own in your own little world without anyone else.

Completely agree Tom! No arguments, less paperwork, nobody turning up late or ringing in sick, nobody to answer to apart from yourself!

 

[Octopus]

Well I'm going to look at that option for the gross payment status, I'll have to look at the figures.

i guess it's all a learning curve, it's a lot easier just working for yourself on your own in your own little world without anyone else.

Or do what I do, and work alongside other trades but deal with the clients directly. A far easier approach!