UK Self employed electrical improver

[Kuba]

Hi all, I recently qualified myself to City & Guilds Level 2 & 3, done 18th edition and found myself a job on site as a subcontractor.

I’m told to invoice the business owner directly, and I’m self employed (registering with CIS tomorrow) but I need a better understanding of the tax as I always worked as en employee before and never in construction industry.

I’ve searched through the web and these forums for answers but still have these few remaining:

Do I put 20% tax on the invoice or just the total and this is deducted by the contractor?

Do I have to deduct anything else? NIC 2 & 4? I’m not sure what they are.

Do I need to keep record of my expenses? All of them or just work expenses like lunch?

I understand I don’t claim VAT cause I won’t earn above £85k.

Can anyone shed some light on this? Any help appreciated!

Cheers

 

[ashrow]

I would recommend you get an accountant
I do feel that asking on a forum you may get wrong or misunderstood advice
Also look at whether you are really self employed or an employee (Some employers will try to dodge tax liabilities and employee paid holidays etc)
As self employed you get to claim back van, tool, etc etc running cost but get no holiday pay, employers pension/NI etc

 

[Zerax]

Hi all, I recently qualified myself to City & Guilds Level 2 & 3, done 18th edition and found myself a job on site as a subcontractor.

I’m told to invoice the business owner directly, and I’m self employed (registering with CIS tomorrow) but I need a better understanding of the tax as I always worked as en employee before and never in construction industry.

I’ve searched through the web and these forums for answers but still have these few remaining:

Do I put 20% tax on the invoice or just the total and this is deducted by the contractor?

Do I have to deduct anything else? NIC 2 & 4? I’m not sure what they are.

Do I need to keep record of my expenses? All of them or just work expenses like lunch?

I understand I don’t claim VAT cause I won’t earn above £85k.

Can anyone shed some light on this? Any help appreciated!

Cheers

You need to get an accountant involved... but to help answer some of your questions...

-You only add VAT to your invoice if you are 'VAT Registered'

-The £85k is a Turnover Value or Sales Value (not what you 'earn'), and only means that if your Turnover is higher than this you MUST register. Below this value, VAT Registration is optional.

-You'll pay your NIC contributions from your 'profits' it's not directly invoicable, although it's possible to take these sorts of things into account if the purpose of your invoice is to replicate a 'Take Home' figure.... this is not usually done though.

-Keep a record of ALL expenses (with receipts), at least until you've spoken to an accountant. Also keep details of the sites you've worked on, mileage etc.

-If you're not VAT Registered, then you can't reclaim VAT on purchases.

 

[Gavin John Hyde]

Where abouts in the Uk are you? if in the west country (Bristol, South Gloucestershire, Bath, or West Wilts) I can recommend a good little accountancy business that are cheap and very good if starting out. Pay them £40 a month and they do all the work for you and will save you several times that a year in things to claim back.

 

[Baddegg]

As above mate get yaself an accountant at least for the first couple of years, one less thing to think about and you can claim the cost back anyway, have you got your UTR number? And CIS will deduct the 20% from whatever you invoice and pay the tax man, keep a record of all business related outgoings (accountant will/should advise these)....and you can claim sustenance but it is complicated....oh and good luck!

 

[Kuba]

As above mate get yaself an accountant at least for the first couple of years, one less thing to think about and you can claim the cost back anyway, have you got your UTR number? And CIS will deduct the 20% from whatever you invoice and pay the tax man, keep a record of all business related outgoings (accountant will/should advise these)....and you can claim sustenance but it is complicated....oh and good luck!

Yes, I have got a UTR. Will register for CIS tomorrow on the phone.

Should I include all these details on every invoice I send you think? Also should my totals include gross and then net after 20% for the record or just the total I invoice and then expect to get 20% less?

Thanks so much!

 

[Baddegg]

You’ll get 20% less of whatever you invoice....

 

[Dustydazzler]

In a nut shell the main contractor will deduct 20% from what ever labour invoices that you give to them. It goes into a tax kitty.
At tax year end you will fill a tax return and all this 20% does is then assist paying your tax bill.
It’s not a bad system and ‘should’ mean you can comfortably be able to afford the tax bill.
My wife is self employed as a sports coach but no such thing as cis.
So has to remember to put aside money each month in a separate bank account,

 

[Baddegg]

In a nut shell the main contractor will deduct 20% from what ever labour invoices that you give to them. It goes into a tax kitty.
At tax year end you will fill a tax return and all this 20% does is then assist paying your tax bill.
It’s not a bad system and ‘should’ mean you can comfortably be able to afford the tax bill.
My wife is self employed as a sports coach but no such thing as cis.
So has to remember to put aside money each month in a separate bank account,

I don’t do cis either and don’t use an accountant anymore....it’s not that difficult but an accountant is invaluable when first starting out I think

 

[derek]

Strictly speaking, as an improver you probably shouldn't be self employed as you are subject to direction and control. Having said that, it means you can claim your car/van/bicycle mileage (45p/45p/20p per mile) as a business cost so keep a record of your milage on a spreadsheet, your home is your office so you can claim travel costs, including train, bus and parking from your office to other work sites.
Keep all your receipts for tools and materials, you can claim a small amount for use of home as office and also laundry allowance as well.
You can claim for safety workware like boots, highviz jackets gloves etc. also a uniform embroidered with your company logo. You can't claim for the cost of a suit to meet clients though, it counts as clothing that could be worn on a normal occasion.
If you use a mobile phone then you can claim the cost of that, you are supposed to work out what is personal use and what is for business but you could have two phones obviously. Same goes for a company laptop to do your accounts on.
Food allowance is a contentious issue as you need to eat to live, you are only supposed to claim the cost of food if it is outside of what you'd normally spend, for example you are working away from home and you have to eat at a restaurant or get a takeaway.
An accountant can advise you further but bear in mind accountants interpret tax law in different ways so some are a bit more amenable to allowing certain costs than others.
Ultimately HMRC will decide if you ever get investigated which has happened to me once; but I was always carefull to read and quote to HMRC their BIM guidance which is available on their website.
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ECS card, PASMA, IPAF, and work related training courses can be claimed for as well as books and any memberships required for work.
You'll need to register for self assessment to get your tax return in, it must be in by January 31 following the end of the financial year otherwise you'll get fined even if the government owe you money from your 20% CIS deductions.
Your NI contributions are calculated when you submit your self assessment tax return.

File your Self Assessment tax return online

Sign in and send your Self Assessment tax return online.

www.gov.uk

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There is loads on the GOV.uk website about running your own business and tax. Also accountancy forums are another useful source of info.

Self-employment Manuals

These manuals contain guidance on self-employment.

www.gov.uk

 

[Kuba]

Thanks so much for your feedback, very helpful. I think I’ll go with an accountant in the beginning at least because I have no experience with dealing with my own tax ?

 

[Midwest]

When I was finishing my self employment, I believe separate NIC contributions were ending. They are now taken by HMRC via your tax bill?

 

[Baddegg]

An accountant can advise you further but bear in mind accountants interpret tax law in different ways so some are a bit more amenable to allowing certain costs than others.
Source URL: UK - Self employed electrical improver - https://www.electriciansforums.net/threads/self-employed-electrical-improver.179291/#post-1579889
Bit like a spark and 7671

 

[telectrix]

another minefiels is that CIS applies only to installation work. maintenance, repair, alarm and CCTV work ( if you do them) are not subject to CIS deductions.

 

[Zerax]

In a nut shell the main contractor will deduct 20% from what ever labour invoices that you give to them. It goes into a tax kitty....

The 'Contractor' who you invoice and deducts the 20% will pay this over to HMRC on a monthly basis. He should be giving you paperwork that shows what he has taken. You can check with HMRC to see that he has paid this to them.

 

[Dustydazzler]

The 'Contractor' who you invoice and deducts the 20% will pay this over to HMRC on a monthly basis. He should be giving you paperwork that shows what he has taken. You can check with HMRC to see that he has paid this to them.

Yes , I used to get a CIS stub every 3 months from contractors which would show the amount of CIS tax that was paid on my behalf.
The stubs should tally what the HMRC received and that amount is put on you self assessment tax return.
I didn't mind doing CIS as it always meant you had the tax put aside before you had chance to spend it....