CIS Subcontractors: A guide to allowable expenses


As a subcontractor, the easiest figure to calculate for your tax return is probably your income: it’s the sum of the monthly CIS statements you have received throughout the year from your contractors. But what about the expenses? You may well have read or heard conflicting advice as to what you can and can’t claim on your tax return – so what’s the truth? What expenses can you claim on your tax return?

Materials, Tools and Equipment

The most obvious expenses are the materials you’ve used on site, business insurance, tools you’ve bought and the cost of maintaining your tools and equipment.

Motor Expenses / Mileage Allowance

You can also claim the business proportion of your motor expenses, whether you drive a van or a car. Include your road fund licence, insurance, petrol/diesel, MOT, servicing, repairs, HP/loan interest, parking and toll fees. If, for example, business journeys amounted to 75% of your vehicle’s total mileage, then you would claim 75% of all these costs on your tax return. It may be more advantageous for you to claim using the mileage basis instead of going by costs: you simply claim 45p per business for the first 10,000 business miles, and 25p for every further business mile.

Internet, Phone and Stationary

The business proportion of your internet and phone costs, whether a home phone or mobile, may also be claimed along with stationery costs you’ve used for business like stamps, paper and printer ink.

Protective Clothing

Claiming clothing costs is a contentious area. As a subcontractor, you can claim for personal protective equipment. This would include clothing that protects you (such as overalls, hi-viz jackets, trousers with padded knees) and equipment like helmets, steel-capped boots, gloves, goggles etc. You can also claim the laundry costs for cleaning protective clothing. You cannot, unfortunately, claim for normal clothing worn while you’re working. Clothing is worn for “warmth and decency” (as the Revenue put it) and for work at the same time. This situation where there is simultaneous private and business usage is known as “dual purpose”. Tax deductible expenses need to be “wholly and exclusively” for business, and due to this dual purpose, normal clothing bought while working does not qualify for tax relief.

Home Office Expenses

If you work from home – such as writing up quotes and invoices, looking for or buying business materials online – you may claim part of your home bills. It can, however, be time consuming and difficult to work out how much of your home bills relate to your business. A practical alternative would be to use the Revenue’s “simplified expenses” rate: if you use your home for business for at least 25 hours per month, you can claim £10 costs a month.

Administration expenses

A spouse or other member of your family who helps you (perhaps with administration and/or bookkeeping) may be paid reasonable remuneration for their work, providing the Revenue’s “RTI” rules are adhered to: talk to us about this if you would like further information.

If you are in any doubt as to whether you can claim certain expenses, please keep the receipts and we can advise you when we prepare your tax return at the year end. To get an estimate of your tax rebate, try out our CIS tax rebate calculator.

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Comments (29)

  • steve Reply

    Hi Amit,

    I have been really busy this year so far and have made a lot of money from one particular contractor.

    I am registered for CIS 4 and tax deducted at 20% on all earnings. I get a monthly statement and everything is in order.

    My question is; is there an upper limit on earnings before i have to pay more than 20% tax?

    Thanks

    Steve

    May 21, 2018 at 8:29 pm
    • Sanjay Madhavji

      Hi Steve,

      No the 20% is fixed. However, when you complete your self assessment the regular income tax bands and personal allowance come into play. For example, for 2017/18, you would receive £11,500 tax free, pay 20% on the next £33,500 and 40% on the rest (up to £150k). Any tax already deducted by your contractor will reduce your tax bill (and may even result in a net refund). NI will be payable too.

      June 1, 2018 at 11:48 am
  • Rokas Reply

    Hello,

    I would like to ask if I spent 1000£ On tools can I claim full amount of 1000£ or VAT 20% which is 200£ ?

    Thank you

    March 25, 2018 at 10:28 pm
    • Sanjay Madhavji

      Hi Rokas, unless you are VAT registered, you cannot claim any VAT back. However, you can claim capital allowances on tools which is effectively the same amount (20% of your purchases).

      April 5, 2018 at 10:04 pm
  • JOSEPH CONCEPTION SALDANHA Reply

    Hi..
    In this tax year i worked under umbrella for 2.5 months and then CIS for 4 months. Can i claim tax back together or i have to do this seperately in April 2017..

    Thanks..

    March 27, 2017 at 4:56 pm
    • Sanjay Madhavji

      Hi Joseph, you will need to wait until April 2017 when your tax return for 16/17 is issued.

      April 2, 2017 at 2:26 pm
  • Brent Reply

    Hi I have a few questions I started self employment January this year so will I be able to do a tax return this April and if so how much of my expenses will I be able claim back? by April I would of earned roughly £8000 before tax and I pay 20% tax every week, my expenses will be roughly £1000 by April and also do I need prove mileage? Thank you in advance.

    February 14, 2017 at 10:09 pm
    • Sanjay Madhavji

      Hi Brent, you should be able to claim back all of the expenses providing they are valid business expenses. In terms of mileage, you need to keep a record of the places you travelled to for work.

      April 2, 2017 at 2:41 pm
  • Yosief Reply

    I work as CIS subcontractor and Uber tax driver so can i claim expense while i have tax liability for uber

    February 12, 2017 at 6:27 pm
    • Sanjay Madhavji

      You will need to do a tax return either way which will tell you if you have overpaid tax.

      April 2, 2017 at 2:42 pm
  • John scully Reply

    I am a subcontractor and have been with my latest firm for 3 months. Wages are paid fortnightly but this company is taking £25 out of every wage i receive for Admin fees. Is this legal to take £50 monthly from my wage?

    February 3, 2017 at 5:14 pm
    • Sanjay Madhavji

      Hi John, if that is what they have agreed with you (check contract) then yes it is legal.

      April 2, 2017 at 2:43 pm
  • Tim Sheppard Reply

    If I claim for example £4000 mileage allowance does that mean I get a further £4000 tax free?

    December 11, 2016 at 5:10 pm
    • Sanjay Madhavji

      Yes thats correct.

      December 14, 2016 at 9:48 pm
  • gary Reply

    my contractor has deducted 20% cis on my invoices which includes materials. can i claim the materials back from the cis scheme?

    October 10, 2016 at 1:32 pm
  • Simon Dawson Reply

    What date can I apply for my CIS rebait? I worked self employed from April 2015-March 2016

    April 5, 2016 at 7:40 pm
    • Sanjay Madhavji

      Hi, you can apply now.

      April 6, 2016 at 8:22 pm
  • Josh Reply

    Hi guys am I right in thinking that I should be getting at least a £2000 tax rebate on the CIS scheme as I have paid tax on all my earning even though the first £10,000 odd its tax free and I’ve paid tax on that as well. Please help.

    March 31, 2016 at 11:23 am
    • Sanjay Madhavji

      Hi Josh, it’s hard to say without seeing the full details of your income and expenses. But if your CIS income was over £10K then yes £2k rebate is a good ballpark figure.

      April 6, 2016 at 8:23 pm
  • Julie Astley Reply

    What do I need to back up amount of mileage claimed? I know where I travelled but nothing in writing.

    January 18, 2016 at 9:45 am
    • Sanjay Madhavji

      Hi Julie, please see

      If you are claiming actual motoring costs rather than a per mile rate, then you will need all receipts (but no logs needed).

      April 6, 2016 at 8:25 pm
  • Mike Reply

    Hi!
    Can I claim public transport expenses?

    September 12, 2015 at 5:39 pm
    • Sanjay Madhavji

      Yes if you are self employed then these would be claimable.

      September 22, 2015 at 10:02 pm
  • Graham Reply

    Will lodge/accommodation payments made whilst staying away from home be an allowable expense I am having trouble finding a definite answer for this?

    August 25, 2015 at 5:06 pm
    • Sanjay Madhavji

      If your employer reimbursed you the cost and you were taxed on it, then you can claim it back. If your employer has a dispensation, then they do not need to report the payment on your P11D and you will not have been taxed on it.

      September 2, 2015 at 10:10 pm
  • James Mosley Reply

    What can I do if i dont have my tools receipts? can i still claim??

    June 3, 2015 at 9:55 pm
    • Sanjay Madhavji

      Hi James, you would need some sort of proof of expenditure. Are you able to get a statement from your tool supplier? Most suppliers can print this out right away.

      June 9, 2015 at 1:46 pm
  • John Reply

    I have claimed car costs in my previous returns. This year it works out better to claim 45p per mile. My question is where do i put it on my tax return? thanks

    June 2, 2015 at 10:41 am
    • Sanjay Madhavji

      Hi John, you need to be consistent – if you have previously claimed actual costs, you cannot now switch to claiming mileage until you change the vehicle.

      June 2, 2015 at 10:44 pm

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