CIS Tax and National Insurance
In most cases you will have 20% tax deducted by the contractor paying you, this is deducted from your pay after any expenses deduction shown on your pay advice.
For some people they will have 30% tax deducted, this will because they have failed to register with HMRC as a Sub-contractor or they have not kept their tax affairs up to date with HMRC.
To be paid 'gross' you must:
- Work in the constructions industry.
- Your work must be carried out mainly in the UK and run through a bank account.
- You must have a turnover, excluding VAT and materials of at least £30,000 per year.
- You must be fully up to date with your tax affairs, including filing of any returns and tax and NI payments to HMRC.
There are further rules behind being paid gross and the compliance obligations are checked by HMRC annually.
Final point on 'gross' payments, you still need to pay the tax and NI on your income and you do this via your tax return.
National Insurance is also payable; you will pay both Class 2 and Class 4 National Insurance.
Class 2 is payable at the rate of £2.50 per week (tax year 2011/12) this is usually payable quaterly to HMRC.
Class 4 is calculated at 9% of your net profit, you do not pay this on all of your profit, there is an allowance called the lower profits limit and any profit below this amount is exempt from National Insurance. The lower limit for the tax year 2010/11 was £5715 and for the current tax year the limit is £7225.
Tax Advantage Services
Tax Advantage offer a fixed fee service this includes accounts, preparing and submitting your Tax Return to HMRC.
Everything is done by post, email and telephone.
Contact us now for a hassle free, quick service.
*This is for applications made prior to 31st October, after this date a £10 month incremental charge will be added.
Tax Advantage offers a friendly professional service where the client comes first.