Some FAQS & Tips about Tax, NICs & Filing Deadlines

CIS SUBCONTRACTOR REGISTRATION

If you are not already registered as a CIS subcontractor you can do so by contacting the HMRC CIS helpline on 0300 200 3210, you will find them friendly and helpful. Opening times:-

8:00 am to 8:00 pm Monday to Friday

8:00 am to 4:00 pm Saturday

Closed Sundays, Christmas Day, Boxing Day and New Year's Day

If you work as a subcontractor before you receive your UTR number you will have tax deducted at 30%, once you are in receipt of your UTR number please ensure you give it to any contractor you work for and your tax will be deducted at 20%. Any tax you have paid at the higher rate will form part of your tax refund claim at the end of the tax year.

CLASS 2 NIC

If you are a CIS subcontractor or otherwise self- employed you will be required to pay Class 2 National Insurance Contributions in 2014-15 of £2.75 per week if your earnings/profits are over £5,885 and in 2015-16 contributions of £2.80 per week if your earnings/profits are over £5,965. If you have recently registered , HMRC will write to you with arrangements on how to pay your contributions. Arrangements have recently changed & contributions wil now normally be payable along with Class 4 NIC based on your tax return, from 6 April 15 for the tax year 2015-16.

CLASS 4 NIC

In addition to Class 2 National Insurance Contributions as a self-employed person you will also be liable to pay Class 4 National Insurance Contributions as follows:-

2012-13 9% of earnings/ profits between £7,605 and £42,475 and 2% after that.

2013-14 9% of earnings/ profits between £7,755 and £41,450 and 2% after that.

2014-15 9% of earnings/ profits between £7,885 and £41,865 and 2% after that.

2015-16 9% of earnings/ profits between £8,060 and £42,385 and 2% after that.

Class 4 NIC are calculated as part of your self-assessment tax return and will be deducted by HMRC from any tax refund that is due provided there is a sufficient refund, otherwise you will be liable to pay any tax and NIC's due.

AM I REQUIRED TO COMPLETE A SELF ASSESSMENT TAX RETURN?

All self-employed persons are required by law to complete an annual self-assessment tax return (SAR) i.e. your CIS Tax Return or standard self-assessment tax return, you will also be required to complete an SAR if you earn over £100,000 per year. Those who receive benefits-in-kind from their employer may also be required to submit an SAR, along with most company directors. This is why firms like ourselves exist, to provide the assistance you need to file your CIS Subcontractor Tax Return/ Refund or standard self-assessment tax return whether you’re an employed individual or business owner.

The deadline for filing paper returns is the 31st October following the tax year ending 5th April and for on-line returns it is the 31st January following the end of the tax year. So for the tax year 2014-15 ending 5th April 2015 paper returns must be filed by 31st October 2015 and on-line by 31st January 2016. Any tax due must be paid by the relevant 31st January.

PENALTIES FOR LATE FILING

Penalties will be imposed if your self-assessment tax return is not filed in accordance with the deadlines.

For the tax year 2013-14 (on-line deadline 31st January 2015) the penalties are as follows:-

1 day late - £100 fixed penalty even if there is no tax to pay or if it has been paid on time.

3 months late - £10 for each following day up to £900 plus the £100 fixed penalty above.

6 months late - £300 or 5% of the tax due whichever is the higher plus the above.

12 months late - £300 or 5% of the tax due whichever is the higher plus the above.

In serious cases it may be 100% of the tax due instead as well as the above.

GETTING YOUR CIS TAX REFUND

In order to be able to claim a Subcontractor tax refund you will need to complete a self-assessment tax return at each tax year end and of course at SUMASSISTANCE we can do that for you.

Good record keeping will ensure that you get the maximum available refund, so it's important that you keep all your income and tax statements from contractors as well as any receipts for business expenses incurred.

WHAT IF I HAVE MISSING CIS STATEMENTS!

Contact your Contractor for any missing statements or a letter confirming Total earnings and Total Tax deducted for the year ended 5 April 2015 or previous years. We can accept an e-mail so long as it bears the company logo and full address or payslips, so long as all your earnings are covered.
If you don't get any joy from contractors, contact your Local Tax Office and request a Summary of your CIS payments. Please explain that you have exhausted all other options and that you are not getting any co-operation from your contractors despite several attempts and you have nowhere else to go. In these circumstances they are obliged to provide you with a full print out of your CIS earnings & deductions.
If even this fails then you need to send us the relevant bank statements and we will work out your earnings from your net payments, however HMRC may challenge the figures and this may cause a delay or reduction in your CIS Tax Refund.

WHAT EXPENSES CAN I CLAIM FOR?

Expenses that are incurred wholly and exclusively for the purpose of the business, e.g.

Materials and Loose Tools

Personal Protective Equipment

The Costs of Subcontractors that you have engaged

Use of your home as an office

Secretarial costs

Accountants/ Professional Fees

Travel and subsistence

Motor Expenses- either as mileage claims or percentage of costs

Telephone - Mobile and Home (Business use)

Internet costs

Stationery, printing and postage

Business Insurance

Subscriptions & memberships

Advertising and promotion

Training costs

Bank interest and charges

Capital allowances for business assets

Our straight forward pack contains easy to complete sections for your expenses and we will also include a mileage log sheet to complete if you are claiming mileage, all you have to do is contact us. Mileage logs downloads for 2014/15 & 2015/16 are available at the bottom of this page.

INSURANCE

You are not required by law to have Public Liability Insurance but it is advisable. Employers Liability Insurance is a legal requirement if you have employees. You can easily get a quote on-line but if you would prefer to talk to somebody we can arrange this for you.

UMBRELLA VS CIS VS POM/EDM

If you are engaged through an agency you may be offered the opportunity to work under an Umbrella Scheme (this a PAYE scheme under which temporary workers can claim an offset for expenses such as mileage, meal allowance, PPE etc.), the amount of expenses which can be offset is restricted by a minium wage stipulation. If you ask for a comparison of take home pay, please ensure that they take into account the fact that you can also claim many of these expenses, often the comparison is only made against CIS gross less 20% tax. You may possibly lose out.

POM (PAYE Operative Model) or EDM (Elective Deduction Model) are effectively self-employed payroll models, similar to umbrella, under which you can claim an offset for expenses. There is no restriction of the level of expenses which can be offset other than the amount of gross pay. However there will be no right to holiday pay and if your pay net of expenses falls below the qualifying NIC threshold you will not receive a pension credit.