You need to do before you can claim something CIS

Before you can claim expenses under the Construction Industry Scheme (CIS), you need to ensure that you meet specific requirements and follow certain steps.

Register for CIS

  • Subcontractors: If you’re working as a subcontractor, you must register for CIS with HM Revenue and Customs (HMRC). You can do this online through the HMRC website or by contacting them directly.
  • Contractors: If you’re a contractor, you must also register for CIS and ensure you deduct the correct amount from subcontractors’ payments and send it to HMRC.

Maintain Accurate Records

  • Receipts and Invoices: Keep all receipts and invoices for any expenses you plan to claim. These documents serve as proof of your expenditures and are essential for substantiating your claims.
  • Mileage Logs: If you’re claiming travel expenses, maintain detailed mileage logs, including dates, destinations, and reasons for travel.
  • Bank Statements: Keep copies of your bank statements to provide additional evidence of your business expenses.

Ensure Expenses are Business-Related

  • Directly Related: Ensure that all expenses you intend to claim are directly related to your business activities. Personal expenses are not deductible.
  • Wholly and Exclusively: The expenses must be wholly and exclusively for the purpose of your business. Mixed-use expenses (both personal and business) must be apportioned correctly.

Know What You Can Claim

  • Familiarize yourself with the types of expenses that are allowable under CIS, such as materials, tools, protective clothing, travel, subsistence, office expenses, training costs, professional fees, insurance, admin costs, advertising, and vehicle costs.

Calculate Deductions Correctly

  • Ensure you deduct the correct amounts from payments if you’re a contractor. The standard deduction rates are 20% for registered subcontractors and 30% for unregistered subcontractors.
  • As a subcontractor, ensure that the deductions made by contractors are correctly reflected in your payment and deduction statements.

Keep Up-to-Date with HMRC Regulations

  • CIS Returns: Submit monthly CIS returns to HMRC if you’re a contractor, detailing payments made to subcontractors and deductions taken.
  • Tax Compliance: Stay compliant with all HMRC regulations regarding CIS, as non-compliance can lead to penalties and interest charges.

Use Accounting Software or Services

  • Software: Consider using accounting software that supports CIS, as it can help you keep track of your expenses and ensure you’re claiming everything correctly.
  • Professional Help: Engage an accountant or tax advisor who is familiar with CIS to help you manage your claims and ensure compliance with tax laws.

Submit Your Self-Assessment Tax Return

  • As a subcontractor, include all your income and expenses on your annual self-assessment tax return. Make sure to claim all allowable expenses to reduce your taxable income.
  • File your self-assessment tax return by the deadline (usually January 31st following the end of the tax year) to avoid late filing penalties

By following these steps, you can ensure that you are properly prepared to claim expenses under CIS. Keeping accurate records, understanding allowable expenses, and staying compliant with HMRC regulations are key to successfully managing your CIS claims.