CIS Tax Return

greenelephant_2

Hello everyone

I have a question. I know CIS is 20% deduct tax from gross income. I just need to know with expenses such as motor/petrol, tools, phone, car insurance , are they meant to be subtracted against your net income or added onto your net income. I have a friend who's done a tax return and the accountant he went to deducted his earnings against his net income. Is this meant to happen?

Elaine_Wilson

I take it when you say net income you mean after deduction of the 20% and not net of expenses.

The accountant should have prepared the accounts using the gross income and then deducted the allowable expenses. This gives the net taxable profit.

The tax deduction is basically ignored until the overall tax liability is worked out. The 20% deductions are then treated as payments on account of this liability.

greenelephant_2

yes I meant 20% off gross figure when I stated 'net income'. So if im taking in everything you said correctly the accountant takes the total of all my expenses and takes it away from my "net income" instead of adding it on to the "net income" total? Therefore reducing the total sum of my rebate instead of increasing it.

Ste_C

No, you're getting confused. It's like this:

Income 100,000
CIS paid 20,000

Forget about the CIS tax now

Expenses 50,000

Income less expenses (100,000 - 50,000) 50,000

Taxable at about 20%

Tax due 10,000

Tax already paid 20,000

Refund due 10,000

That's a very rough example and ignores your personal allowance. But your accountant isn't reducing your rebate! Don't worry!

greenelephant_2

Thanks I understand you now

greenelephant_2

OK I myself have just gone in for a CIS return at an accountants. They have stated that my net profit is £2,866.00 from an income of £5,719.00
Also no tax liability is incurred as my personal allowances exceed my income. However I have had tax deducted at source totalling £1,757.00 which is due to be given back to me as the rebate.
I dont get how they have got to that figure and have rung them up to clarify how they reached those figures. They were a bit vague with me andtherefore I wasnt completely satisfied with their answer. The link below is a copy of the profit/loss report. Does the figure they are quoting for the rebate add up correctly? How does CIS tax return work?
Thanks in advance for any feedback I receive

markssmellysocks.angelfi.re.com/PROFIT-LOSS_ACCOUNT_2009.rtf

*angelfi.re is meant to be !!!!!!!!!*

greenelephant_2

can anyone help?

fengirl_2

Can't make this link work. What information did you provide them with about your expenditure?