The Construction Industry Scheme (CIS) is HMRC’s way of keeping tabs on the taxes for folks like you in construction. Whether you’re wielding a hammer or drawing up blueprints, if you’re self-employed under CIS, your employer takes off 20% or 30% from your pay. This slice helps cover your taxes and National Insurance for the year.
Year-End Math: Time for Rebates
Come year's end, it's time for some homework with a Self Assessment Tax Return. This is where you tally up what you owe in taxes and National Insurance. If your employer’s deductions under CIS were a tad overenthusiastic, you might just get a tax rebate. But if they didn’t deduct enough, you’ll need to square up the difference.
CIS Statements
A CIS statement shows the tax deducted by your employer every payday. Think of it as a summary of your earnings minus the CIS tax held back, along with a few other key details like:
- Both your and your contractor’s info
- Your Unique Taxpayer Reference (UTR)
- A verification number (if you’re paying the higher rate)
- The gross amount you’ve earned
- The CIS deduction
- Any costs for materials you’ve shouldered
There’s no one-size-fits-all format for these statements, but they all share some essential info.
Why keep CIS Statements?
Beyond being a must-do, hanging onto your CIS statements is like keeping a financial diary. They’re golden if HMRC ever asks you questions about your taxes. Plus, they’re crucial for calculating any tax rebate you might be owed, potentially speeding up the process to get any excess tax paid back to you.
When do CIS Statements arrive?
Expect a CIS statement to land in your inbox within 14 days after each tax month wraps up. Since tax months end on the 5th, not the usual end-of-the-month, these statements and your payslips might not always sync up.
Understanding your CIS statements can be the first step in maximizing your tax rebate potential. Keep them safe, and they could help put some hard-earned cash back in your pocket.