Construction Industry Scheme and tax credits

[Mmlemony]

Hi. My partner is a self employed sub contractor under the construction industry scheme. When I called to renew our tax credits, I gave them the gross figure of what he earns, as they asked for. I then received a letter saying they had overpaid us. I called them and the operator said that I should have given the net profit figure which is obviously different from the gross figure I gave originally. So then I gave him the profit figure which was gross earnings minus allowable expenses. However, this figure has still not had tax taken out of it as the contractor deducts 20% from the gross amount. So my question is, should I have given the amount my partner received each week (minus 20% deduction), minus allowable expenses?

Does this make sense? Or am I being incredibly thick?! Thanks.

I think there are some misunderstandings here.

The relevant figure for tax and tax credits is gross income less allowable expenses.

You don't deduct the 20% CIS tax from his income as that's tax.

The relevant figure for tax and tax credits is gross income less allowable expenses

Yes, this sounds right. Don't forget that if they are taking 20% off all his earnings, he will eventually get some tax back because taking 20% off everything doesn't allow for the personal allowance.

Has he done his tax return for 2015/6 yet? That would give you the correct figure for tax credits.

My DP has done work under CIS before and then via an umbrella company (not his choice but it is just how the construction industry works these days it would seem) and we always made sure we did his tax return as soon as possible after the end of the tax year because there was always a few hundred pounds in overpaid tax to refund - I think you have to be quite a high earner for this to not be the case, which I assume that you/your DP are not as you are talking about tax credits.

Thanks everyone. Thanks for confirming what I thought! I just got very confused with it all. I have used the gross earnings minus allowable expenses. Yes, he has done the tax return for the last tax year and we have had a rebate.