CIS (Construction Industry Scheme) Tax HELP!

[LoveBox]

I swear to God I have been googling for about three days solid and I am still clueless. I read an 88 page booklet from HMRC that might as well have been written in chinese for all the sense it made to me, and so I am turning to mumsnet!

DH works as a manual labourer in the construction industry. He left his old job (PAYE) in Sept, and started a new job in November, that pays him under CIS. Since Nov, he has earnt about £6,000 and paid about £1,300 in tax. He will apparently get a bill through for NI because that isn't included in his deductions from his employer.

The other guys DH works with do a tax return each year and got a tax rebate by calling a number in the back of the newspaper, who did all the work for them, and charged them about £200-£400 each. This would be last resort for me - I would resent paying some dodgy company in the back of The Sun, if its something a sane minded person could do themselves (and usually, I swear, I am sane minded.)

So - can anyone explain in simple terms what DH needs to do/who he needs to contact to get this started?

I'm pOsting on my phone do this will be brief. It sounds like your duh is self employed as via only applies to self employed people partnerships and limited companies not employees

He needs to ring Hmrc and register as self employed and on the CIA scheme. The main contractor will be deducting 20% or it may even be 30% if he isn't registered yet. He needs to fill on a return each year and claim back any overpayments. I'm a bit hazy on that as in my job I just deal with verifying and paying sub contractors. The company I work for us paid gross as we are a large firm. I'm in work again on wednesday do if you need to know anything else I can ask my mum who is the fountain of all knowledge when it comes to cis

If its any consolation when they originally brought out the new scheme they ran out of the explanation booklets so we had to guess. The new scheme is much much simpler than the old system if cards and vouchers that totally confused me

Auto predict changed c I s to cia

Oh Elphaba - I love you already. He is definitely getting 20% tax now I look at the payslips, so thats about right. I was just so confused why someone who is paying tax would need to do a tax return - I guess it just didn't click with me that he is technically self employed, even though he did register for something back in November and got a "UTR" number, so now I think about it, I am feeling a bit stupid for not realising he is 'self employed'. Duh.

Now I know that, that means he just needs to do a regular self-assessment tax return then, right? Its not some magical, special CIS tax return? If thats the case and its just a regular tax return, I think we might be able to cope with it ourselves!

I will check but there is a space on a regular self assessment form for you to fill in howuch you have had deducted under cis. We make all our sunbird even those who are almost employees do an invoice each month rather than just a time sheet do it is all above board Hmrc want everyone to be employed and you are supposed to adhere to certain rules about quoting and carrying risk on the other hand in the current climate many people in the construction industry are being encouraged to go self employed by job centre etc in order to get whatever work they can.

One tip. Make the start of his tax year 5th April so do a return for nov to 5 apr now rather than having to do some complicated balancing payment.

Now I know that, that means he just needs to do a regular self-assessment tax return then, right? Its not some magical, special CIS tax return? If thats the case and its just a regular tax return, I think we might be able to cope with it ourselves!

That's right - there is a box on the self employment page of the SA return (box 37 on the paper version of the 2010/11 return labelled "Deductions on payment and deduction statements from contractors ? construction industry subcontractors only" where the total already deducted goes.

There are many firms that will do this for you, not all of them are dodgy and most of them will be aware of expenses that can be claimed to reduce the tax bill/increase the refund by at least as much as their fee.

Oh, forgot to mention that the threshold for Class 4 NI is £7,225 in 2011/12 so if his self employed turnover is only £6,000 (and so his profit after deducting allowable expenses will be even less) he won't have any to pay.

20 % is deducted from all of your DH's pay so in effect you don't get a tax free allowance. This is why you usually get a rebate. The tas on the personal alllowance alone would be about £1500.
One thing you need to be careful about is employment status. If you work for ht esame company all the time and do not move about technically you are an employee. HMRC doesn't like it because they see it as the employer avoiding paying employer's NI.

Forget to day - I fill in DH's return every year not that hard. Keep an XL SS that lists all income and expenditure. You don't need to pay anyone

It's easy to do yourself and once you put the figures in it'll tell you automatically if he's due a rebate, dp got his through pretty quick too.

Is he registered to pay ni? My class 2 ones come out by dd, it's about £10 a month.

In addition to Mr Anchovy's stated class 4 NIC info there is also class 2 NIC to consider. The level at which this should be paid is above net earnings of £5,315.

If your dh has registered with HMRC and received an UTR it is possible that he registered to pay class 2 NIC by direct debit or quarterly invoice but do check that he is registered for Class 2 NIC as it sounds like his earnings will be too high for him to claim exception therefrom.

If you are going to file your own return do check that you are declaring the gross income before tax is deducted and that you have added up all of the claimable business expenses to declare the total in the right box on the return.

There are quite a few possible claims for tax deductible expenditure and so it may be advisable to 'phone around your local accountants and get quotes for preparing a tax return for his first year of trading. Get them to share their workings with you so that you can do it all yourself in subsequant years and you may find it money well spent.

You can do the tax return online once you've got a login from HMRC. I've been doing DHs for a few years now and once you've worked out his expenses and got his income figures, tax paid etc. it's pretty straightforward. I paid for advice from an accountant who DH was reccommended; we were going to get him to do the return but he assured me I'd be able to manage.

The class 2 NI is now billed twice a year, it's about 2 x £70. The class 4 NI is 8% of taxable income and is paid in with the tax on the return.

When you have put all your figures in online, a calculation page comes up with totals to pay/be refunded. You can save what you've done at any point so you don't have to do it all in one hit.

Although your DHs bill won't be due until Jan 2013, I'd file it ASAP after 6th April. My DH hadn't worked for a while and his bill for his first (good) year was higher than the threshold they set so we also had to find 50% advance towards the next year. Had to borrow £3k to pay it