[tinker]

Hello all,

Your help would be much appreciated...we have done a builders clean recently and have been asked to register with HMRC for CIS, which we have done. Then we were asked "Please would you let me have a breakdown of labour and materials as we will be deducting 20% tax from your labour charge" I know I will have to read through some HMRC material to familiarise myself with the Scheme but I was wondering if anybody would have some clear-cut advice from their own experience with this...Many thanks in advance. What percentage of the bill should be "labour & materials" as we have done much of the work ourselves!?

Cheers,
Ramona

[BDCS]

The income tax will be deducted on the labour element of the invoice and not on the materials. So how much income tax do you want to pay on this ? Some say that you can argue and not pay any but I'm happy having the tax "in the wood". 20% materials would be fine imho

[kenny bald]

Just % the materials accordingly. The tax they deduct will leave you with X amount of profit. This profit will not be taxed again at the end of the year.

[BDCS]

Its nothing to do with profit, they tax you 20% on all labour - end of. It is supposed to be to get the tax from the self employed at source

[Griffus]

Keep it simple and just state labour only. Materials will be pennies and it's not worth the added grief.

We are labour only with all clients for CIS purposes.

Don't let them claim any retention from your payment, with cleaning this isn't usually done unless in error.

If you earn more than £32000 (ish) per director you can apply to be CIS exempt. Worth thinking about if you get in to this and cash flow gets tricky.

Alternatively, just use it as a savings fund. HMRC are slow to refund but do pay interest on all due from when you stake your claim.

[Denise l]

Theres no CIS tax on external windows either so deduct that from your invoice as well as the materials. Look on HMRC website where they state this.

Denise

[Kev Martin]

A lot of this depends on the company and whether you have PAYE employees.  If you have employees PAYE then it is of no consequence to you as you simply offset the CIS deduction of 20% against your Employer PAYE contributions.  If you don't then just treat it as advance tax in installments or a savings bank if you don't earn enough to pay tax.  My advice would be charge 20% against materiels and 80% Labour this way you either bank or save 16% of the overall cost of each job.  The other alternative is, if you have turnover around £175,000ish (Not sure of this Tax Year exact figure) in Labour only you can apply to have 100% paid to you and no deduction.  Simples!!!

Kev Martin
Marble Life Ltd

[BDCS]

Thanks for that - I'll look to see if I did £175k last year  :

[Kev Martin]

Thanks for that - I'll look to see if I did £175k last year  :

You probably did that in  3 months

Kev

[BDCS]

No, I've worked it out - if I work 40 hours a week and all 52 weeks I would have to charge £84.13 / hour but I only charge £78 so I would fall short  in other words I fail miserably  I'm a one man band nobody knows or understands ! You will remember the words 

[Kev Martin]

No, I've worked it out - if I work 40 hours a week and all 52 weeks I would have to charge £84.13 / hour but I only charge £78 so I would fall short  in other words I fail miserably  I'm a one man band nobody knows or understands ! You will remember the words 

It's combined income!!!  So you need to add the money on for the business you do out of your scrapyard as well

Kev