What Is CIS Reclaim And Why Does It Matter To Me As A Tradesman?
Being registered in a Construction Industry Scheme (CIS) makes you more responsible than ever for a limited company. Doing business in the construction industry is fascinating and sometimes a better way to build your career.
But the business scenario in this modern world is not as easy as you think. Being an agent, you will need to take on several responsibilities, including tax payments to the contractors.
Paying correct tax and national insurance for the limited company is your duty as a subcontractor, especially when you are registered with the Construction Industry Scheme (CIS).
Under the Construction Industry Scheme (CIS), the contractor plays a big role in collecting advanced taxes deductions from the subcontractor and initiates it to the HM Revenue and Customs (HMRC).
Here, a subcontractor’s difficulty is reclaiming what extra he or she has paid to the HMRC. Well, don’t worry!
We have got you covered this time.
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What Is CIS Reclaiming?
In the middle of a busy business market, it is hard to claim something back with legal procedures as it takes time. However, as a subcontractor, you must also claim back what extra your limited company has paid to the HMRC.
The subcontractors and tradesmen working under CIS have a strong deal with taxes; sometimes, they pay minus tax. Well, this provides them with a healthy situation where they can claim a healthy CIS tax return every year.
Well, everyone cannot reclaim under CIS. Only a limited company subcontractor or agent can do this to get the return of the unnecessary tax money.
How Do I Claim Back CIS As A Subcontractor?
Working in the construction industry is not necessarily require to register your business with CIS; you have to fill out a CIS tax return form and submit it each year.
However, if you are not registered with CIS, the government will tax you at a rate of 30%. On the other hand, if you are registered to CIS, it will tax you 20%.
Either way, you are paying more than what you owe as PAYE tax and National Insurance at the end of the year.
It doesn’t matter how much you will get but keeping track of your payments is the key. This is an exhausting and time-consuming long process.
Well, the HMRC and PAYE system works, in the same way, to immediately withhold tax from the source. Keeping track of expenses and statements, including possible deductions on a monthly basis, is thus a step towards reclaiming your overpaid tax to the HMRC.
You are already paying a high rate of tax, and thus it’s your responsibility as a subcontractor to be more comprehensive with cis reclaim.
Why Is CIS Reclaim Important?
Many people do not understand why even CIS does matter to a tradesman!
Well, being a tradesman, you are performing as a self-employed worker, and you expect to get adequate returns for the work you have done so far.
Otherwise, you can legally claim the payments that you own from HMRC. This is where the whole benefits of CIS reclaim lie.
For a self-employed person, taking care of taxes and national insurance is a big deal. The contractor takes your money and regularly pays you to the HMRC.
Now think of that! You have already paid your taxes, and moreover, you are going to get your overpaid money at the end of the year. This is satisfying only when you can reclaim the CIS.
In general, HMRC takes 10 to 14 days to return all your overpaid taxes. And if you have all the documents and track records intact with you, the tax specialist can help you get your return within 48 hours of claiming.