CIS contractor

mercanlandy

I am self employed and employ two workers. A lot of my work is "sub-contract" to larger companies. I have to be CIS registered and these companies deduct my tax at 20% before I receive any monies due. No problem so far. Now I pay then lads their wages, no problem, but, then I have to pay employers NIC. It seams like I am just bankrolling the government all ends up. At the end of the month I'm lucky to get my wages. Is this right.

mrkbrrws

It is right that you pay employer's NIC for any employee you pay over about £100 per week. This is the same as any employer in any industry.

The CIS tax which you suffer does set against your tax liability when you send the Tax Return in, so it isn't an additional tax in itself. Obviously there is a cashflow disadvantage in having to pay the tax up front.

DCodd

You can offset your deductions suffered under CIS each month against your PAYE and NI payments to HMRC if you pay them over on a Monthly basis. Speak to HMRC they will explain how to do this:j

mrkbrrws

DCodd wrote: »

You can offset your deductions suffered under CIS each month against your PAYE and NI payments to HMRC if you pay them over on a Monthly basis. Speak to HMRC they will explain how to do this:j

This only applies to Limited Companies, not sole traders as in this case.

The CIS tax suffered is deducted when the SA Tax Return is completed.

DCodd

mrkbrrws wrote: »

This only applies to Limited Companies, not sole traders as in this case.

The CIS tax suffered is deducted when the SA Tax Return is completed.

Not true, the CIS deductions are shown on your year end P35 which is your payroll return. He employs two people so can offset any CIS deductions suffered against PAYE & NI paid over the HMRC does not matter if tou are Ltd or not only matters if you make PAYE and or NI payments as an employer.

mrkbrrws

The P35 states "Fill in boxes 28 and 29 only if you are a limited company that has had CIS deductions made from payments received for work in the construction industry".

DCodd

I mentioned the P35 to show that the CIS deductions are related to Income taxes.

If you ring the CIS helpline and tell them that you want to offset your deductions against your monthly PAYE & NI payments they will log a "technical query" then somone will ring you back and arrange for the forms to be sent to you.