If you are a CIS subcontractor, the easiest figure for you to calculate will most likely be your overall income. This is the amount of money you have received from your contractors over the entire year. There is however often questions raised about what CIS subcontractors can claim in terms of expenses on tax returns, so you may have heard conflicting information and be a little unsure as to what can and can’t be claimed.
We have outlined below some information on allowable expenses and filling in your tax return to help you prepare.
Preparing for your CIS Tax Return
One thing that you should never do is leave your CIS tax return until the last minute. Not only can this become an incredibly stressful time for you if there is a looming deadline – you might end up not claiming everything that you should be causing you to lose out on part of your claim. Make sure that you prepare your CIS tax return as far in advance as possible. It’s also incredibly important that you keep any receipts or invoices you need as supporting documents as you go so these things aren’t forgotten about and go unclaimed. You can also use these to ask a professional for advice as to whether or not it is an allowable expense if you are unsure.
Tools and Equipment
This is probably one of the most obvious allowable expenses there is. You can claim for any tools you require in order to complete your work, any materials you have used onsite, any business insurance that is necessary, or any costs that are associated with maintaining your equipment.
A portion of your motor expenses can also be claimed as a business expense should you have to travel for work. You can claim for petrol or diesel costs that you have incurred to get to your jobs, road tax fees, costs associated with maintenance or repairs, your MOT, and even parking fees. In terms of mileage claims, you can claim 75% of this on your tax return. Depending on your individual situation, it could be more cost effective for you to claim on a mileage basis as opposed to standard costs. You are allowed to claim 45p (per business) on your first 1,000 miles and 25p for every mile thereafter.
Home Office Costs
Do you work from home? If you are generating invoices, looking for business online or creating quotes from home – part of your home bills can be claimed as part of your tax return. It can however take some time to work out how much of your time at your home relates to your business. You can however use the “simplified expenses” rate. This allows you claim £10 a month in costs if you use your house for business for a minimum of 25 hours a month. This makes the calculation much easier for you.
There will no doubt be an element of admin involved in your job which can also be claimed for depending on how your business operates. If you have a member of your family or a spouse that helps with bookkeeping or administration – they can be paid a level of remuneration as long as you comply with RTI rules.
Do you Require Protective Clothing?
If you are a subcontractor you can claim for any necessary protective equipment. This can include things such as: overalls, hi-viz vests/jackets, protective trousers that have padded knees etc. If you require them – it’s also possible to claim for steel-capped shoes, gloves, helmets, hard hats and alike. Of course your protective clothing will need to be maintained, so you can claim for any laundry costs that are associated with cleaning these items. You are unable to claim for normal clothing however. It is deemed that although you are wearing this at work, it is for personal use at the same time and in part for your own comfort and warmth. The stipulations are that any tax claims need to be solely for business purposes which this doesn’t fit into. Clothing worn at work is what is known as “dual purpose”.
Internet & Phone Costs
If you use the internet to find work online, for research or anything else work related you can claim for a portion of your internet costs too. If you require a mobile phone for work to answer calls, send emails – or simply for online purposes, this is also an allowable expense. If you print invoices, send statements or letters – you can include items such as printer ink, stamps or any other stationery costs associated with this business as part of your claim.
We hope this has given you some guidance as to how to prepare your CIS tax return.