If you are a contractor or self-employed in the UK, then you are likely familiar with the Construction Industry Scheme (CIS). The CIS is a tax deduction scheme that helps contractors and subcontractors manage their taxes. Knowing what you can claim for on your CIS return is essential for complying with the current legislation. In this article, we will discuss what can you claim for on a CIS return in the UK.
The Construction Industry Scheme (CIS) is a tax deduction scheme that allows contractors and subcontractors to be paid gross. Under the scheme, contractors deduct money from subcontractors’ payments and send it directly to HM Revenue & Customs (HMRC). The deductions are used to pay income tax and national insurance contributions. The scheme helps contractors and subcontractors manage their taxes more easily.
The CIS allows contractors and subcontractors to claim for certain qualifying expenditures. These include materials, labour, plant, and subcontractor’s payments. Materials are any physical goods used in the construction process, while labour is any person employed to carry out construction work. Plant refers to any machinery or equipment used on a construction site, while subcontractor’s payments are any payments made to a subcontractor for work done.
The following items can be claimed for on a CIS return:
- Subcontractor Expenses: Subcontractors can claim for expenses such as tools, vehicles, and other materials that are used for work purposes. These expenses must be related to the work that is being done and must be supported by invoices or other documents to prove their validity.
- Travel and Subsistence Expenses: If a contractor or subcontractor is required to travel for business purposes, they can claim for travel and subsistence expenses such as meals, accommodation, and other related costs.
- Pension Contributions: Contractors and subcontractors can also claim for pension contributions, which can reduce their tax bill.
- Materials: Materials that are used for work purposes can also be claimed for on a CIS return. This includes items such as timber, cement, and other materials that are used in the course of the contractor or subcontractor’s work.
- Other Allowable Expenses: Other expenses that are allowable for a CIS return include professional fees, advertising costs, and other costs that are related to the work that is being carried out.
Expenses related to travel and subsistence are also allowed as long as they are necessary for construction work. This includes transport to and from the site, accommodation, meals, and other necessary costs. The cost of clothing, such as safety equipment and uniforms, are also allowable expenses.
In addition to the above expenses, contractors and subcontractors can claim for the costs of employing staff. This includes wages, national insurance contributions, and pension contributions. The cost of software, such as accounting software, is also allowable, as is the cost of professional services, such as legal or accounting services.
Contractors and subcontractors should also be aware of the rules and regulations related to CIS returns. The rules and regulations vary depending on the type of contractor or subcontractor. It is important to ensure that all records are kept up to date and accurate, as HMRC may review the records at any time.