CIS? UTR? its all about tax !

woppo26

Hi people,
Right here goes..........On the 17th of Feb 2011, I started working for a small company as a steel erector (construction). By the end of my first full week my employer told me that im a subbie and i need a UTR number, so for now im paying 30% tax till my UTR number comes through. I have spoken to the tax office and all the paperwork will arrive in 3 weeks. Now my problem is, I aint got a clue how to claim all my expenses back, when it all has to be done by and what i can claim??? all i think is i claim the VAT back on anything i buy for work purpose.... would i be right? a friend of mine has told me he claims for almost everything he buys, like his dog`s up-keep, his home insurance EVEN a shed he brought to keep his tools in at home. I think i need an accountant but im a tight !!!! and i want all the money for myself (lol) But saying that, if i went to an accountant he/she would probably get more money for me than by me doing it myself......So can anyone advise on a good accountant in the Nottinghamshire area? oh and ANY advise on tax for subbies would be great thanks..

DVardysShadow

Tax can be

• Income tax
• National Insurance
• VAT

Being a subbie means most of all that your income tax becomes your responsibility. I am not sure on the NI rules, and unless you become VAT registered, you get no VAT privileges

woppo26

DVardysShadow wrote: »

Tax can be

• Income tax
• National Insurance
• VAT

Being a subbie means most of all that your income tax becomes your responsibility. I am not sure on the NI rules, and unless you become VAT registered, you get no VAT privileges

from what i was told over the phone with the tax office regarding National insurance, is till April this year i will have to pay £2.40p per week then in April it will go up to £2.50p......

Income tax? is that what i earn?
VAT? as il only be earning around £500 per week after 20% tax would i need to be VAT registered? i dont understand....sorry iv never had to do anything like this before. But a big thanks all the same:T

Proppo

I'm a Landscaper / Multi Skilled Tradesman and my experience is this... (I imagine it should be the same for any job).

First off, a good accountant is worth their weight in gold. Really worth looking for one.

You have to register for VAT if you turnover more than £70,000 (I think that's the threshhold). So, you earn £500/week, which totals around £26,000. If for example you had to buy materials for your job, which is doubtful and you had to bill your clients for those materials and you reached £70,000+ then you would have to register for VAT.

National Insurance, you have to call the HMRC and register as self-employed, you then have to pay your own compulsory national insurance contributions (around £10/month). There is voluntary contributions but you don't need to get involved with that.

Personally, I put through:-
ALL of my Fuel Reciepts.
Contract Phone bills.
Any Charity Donations I make.
Any work-wear be it clothes, boots, trainers etc.
Any Vehicle upkeep, MOT, Repairs etc.
Any office equiptment, computers, stationary etc.
There's probably plenty of other stuff to.

Anything which you can relate to your job. I've read people on here, who claim a percentage of their mortgage cost (if they work from home) and various things.

You could just put all of your reciepts in and a good accountant could tell you what you can/can't put through.

Coeus

Just to state a few facts from your post first:

1. 'Subbie' - you are a subcontractor in the construction industry meaning that you have been contracted by your contractor to work.

2. You have had CIS (Construction Industry Scheme) tax deducted - the government does not trust the construction industry and as such CONTRACTORS must deduct a notional tax on the LABOUR ELEMENT (not materials) of any work you do for them. As such working for individuals rather than a contractor you will NOT suffer any CIS tax deductions.

3. You wish to claim back your input VAT (VAT suffered on purchases).

4. It is apparent that you are out of your debt experience-wise in the financial and legal aspects of a sole tradership (I assume you are neither a partnership nor a private limited company).


Information for your benefit, starting from the top down:

ACCOUNTANT
I strongly recommend you seek advice from an accountant. As mentioned a good accountant is worth their weight in gold and the advice provided on this forum will only inform. You appear to be out of your depth and may put yourself at a significant financial disadvantage.

You ask whether an accountant may be a net benefit to you. This depends on how poorly you would run the financial and legal obligations of the business. Though an accountant is usually required due to legal obligations suffered by a sole tradership you will potentially be saving on: income tax (or corporation tax – see later), VAT, CIS tax, fines + interest, surcharges, penalty fees etc.

BUSINESS STRUCTURE
As mentioned above I assume you are a sole tradership. An accountant will be able to advise you of the tax benefits of incorporating as a private limited company. Generally speaking, if you are profitable it is more tax efficient to become a private limited company and receive a wage below the NIC limit (to avoid paying NIC contributions) and receive income in the form of dividends.

VAT
You appear to want to claim back your input VAT. By law you will have to register as a VAT registered sole tradership if your trading income breaches limits as set out per HMRC. An accountant will be able to advise you further on this matter and manage your VAT100 returns to HMRC. For now, assuming you are NOT VAT registered you cannot claim back your input VAT.

Please note if you are VAT registered and profitable you will usually (being in the construction industry) end up owing HMRC VAT as your output VAT (VAT charged on sales) will exceed your input VAT. An accountant will be able to advise you on certain VAT rules that may put you in a better VAT position [for example zero-rating output VAT (charging 0.0% rather than 20.0% VAT) work on new builds].

NATIONAL INSURANCE
This can be particularly complicated depending on your business structure thus seeking the use of an accountant would be highly beneficial especially if you have legal obligations as an employer.

As a sole tradership you are subject to both Class 2 NIC and Class 4 NIC. Class 2 is a compulsory rate paid by the self-employed. You are exempt if your earnings are below a certain limit. Class 4 is you may have to pay if you are self-employed and your profits are over a certain amount each year.

CIS TAX
As noted above you have had CIS tax deducted. An accountant will be able to advise on the system of the CIS and how to best manage your legal obligations however the following basics may be of use:

Contractor – a business contracting construction industry work out to another business. Contractors have a legal obligation to deduct CIS tax from their subcontractors.

Subcontractor – a business conducting work on another businesses behalf in the construction industry. Subcontractors should have CIS tax deducted with certain exceptions.

CIS tax – a notional charge on the LABOUR element of your work at either 20.0% if registered in the CIS tax scheme or 30.0% if unregistered.

Gross certificate – a certificate held by a business in the construction industry allowing gross receipts by a contractor (no CIS tax deductions).

As mentioned above you are a subcontractor and will be able to claim back your CIS tax deducted on an (usually) annual basis or through the PAYE scheme (if you are also an employer). You may also be a contractor if you subcontract a contract to another business in the construction industry in which case you have a legal obligation to deduct CIS tax from the LABOUR element of your subcontractors work.

villabadger

Just got to say that the above post is one of the best I've read on this forum - great advice! :T

You gotta be an accountant............... if you aren't then you are in the wrong job!

AbbieCadabra

great post from Coeus, might be some more info here too. another recommendation to get an accountant from me, it doesn't have to be someone local either. we've just switched from a local one.

woppo26

villabadger wrote: »

Just got to say that the above post is one of the best I've read on this forum - great advice! :T

You gotta be an accountant............... if you aren't then you are in the wrong job!

I agree........:money: