Fun fun fun - it's a tax question regarding CIS

[ed-ectrician]

Hello lads,

Fun one for Sunday night for all of yoooz.

I am starting work under the CIS scheme in not too long. Now I know that you can ask to be paid gross or net. I went for NET because I decided I'd rather have it this way and it's a bit of a hassle to get the gross payments and save money for the end of the year.

AAAAnyway - the bloke I am working for gave me a net figure for how much I will be earning. Let's call it, for arguments sake, a hypothetical £100 a day. Now, is my national insurance class 4 already deducted from this or will I have to save an extra 8-10% a year to pay this at the end of the tax year. E.g - is my hypothetical day rate now £90 aftger deducting tne percent for NI at the end of the year?! HMRC website is, as usual completely rubbish at telling you the most basic information about this

Tax doesnt have to be taxing, yeah right!

Thanks all

 

[electric will]

Cis only deducts tax not Ni anyway so you'll pay the Ni on your tax bill anyway

 

[ed-ectrician]

So I have to save ten percent of my takehome for the end of the year?

 

[cogsey133]

When i recently went cis i set up a direct debit to pay my ni on a monthly basis if that is any help (cannot say how much it is as my wife deals with it all)

 

[dansk]

yes you need to save for your NI

 

[moospark]

If you get yourself a limited company, you'll pay next to nowt.

 

[electric will]

I'm pretty sure yeah, when you fill in your self assessment it'll ask you what you've earned on cis and the tax you've paid on it, they should already know. But you'll pay Ni on your total earnings minus allowances.

 

[ample current]

why do you need pay class 4 NI, self employed only pay class 2. Im a sole trader now and i pay £2.50 ish a week (monthly direct debit) admittedly im not on a cis card now but have worked on one several years ago and the amount of NI was similar then (if i remeber right) it never was linked to how much i earned.

 

[electric will]

You should pay one monthly or every three months like I do, think that's class two and you'll pay another with your tax, think that's class four

 

[Spazz]

With CIS you are deducted 20% for tax, then you have to pay £2.65 per week. If your earning less than £5,595 per year you dont have to pay NIC Class 2. You only have to pay NIC Class 4 if your earnings are over £7,605 Profit (which is for most).

You can pay your NIC Class 2 every week if you want by DD if thats easier

 

[D80]

Amazed at how many self employed don't know the basics of this lol.

I get one bill quarterly, then the rest with my self assessment.The joke that it is seems to give you far less entitlements than ig you had been an employee though

 

[ample current]

I just copied this from direct.gov

[h=4]If you're self-employed[/h]If you're self-employed you pay Class 2 and Class 4 National Insurance contributions. The rates are:

• Class 2 National Insurance contributions are paid at a flat rate of £2.65 a week
• Class 4 National Insurance contributions are paid as a percentage of your annual taxable profits - 9 per cent on profits between £7,605 and £42,475, and a further 2 per cent on profits over that amount

If your profits are expected to be less than £5,595 you may not have to pay Class 2 National Insurance contributions.
Your Class 2 National Insurance contributions payments are due on 31 January and 31 July, the same as a Self Assessment tax bill. You pay Class 2 National Insurance contributions either monthly or six monthly by Direct Debit – follow the first link below for more information about payment dates.
You pay Class 4 National Insurance contributions when you pay your Income Tax.