CIS

[davey85]

On a sales invoice to a client will the deduction of 20% CIS on the whole labour amount even though I subcontract most of the labour element out?

i.e

Invoice amount £4,000

Breakdown:
£1,000 materials
£2,000 (subcontracted out labour)
£1,000 (my labour)

Will the deduction be on the £3,000 or just the £1,000.

(Ltd Company)

 

[David Griffiths]

£3,000

 

[UK Contractor Accountant]

And then you deduct cis tax at the appropriate rate on the subbed out labour you have paid out.

 

[kevin.doran]

@davey85

Before you start to panic though...

Given you're a limited company you'll be able to offset your CIS deductions suffered against those made each month by filing an EPS - bottom section of this.

 

[TimCaprica]

If your turnover exceeds £30k you might be able to escape the CIS madness (though will still have to deduct it from your own subbies) by applying for gross status - https://www.gov.uk/what-you-must-do-as-a-cis-subcontractor/gross-payment-status

 

[talkinpeace]

Gross status is a pig to get nowadays

but yes, CIS comes off your £3000 and you take it off the £2000

and then wait nearly a year to get Belfast to refund you the balance at the end of the tax period

 

[davey85]

Thanks for your responses. My turnover will hit that soon so I will apply.

What happens regarding deductions if I invoice a Company who is not CIS? i.e I do construction works for an office Company.

 

[David Griffiths]

In that case you are not subcontracting, so the CIS rules do not apply. (Some big companies are regarded as deemed contractors, but they will know who they are themselves, so no need for you to worry about it.