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.
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.
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.