Contractor Tax Solution

You must register as a contractor with the Construction Industry Scheme (CIS) if:

you pay subcontractors to do construction work
your business doesn’t do construction work but you usually spend more than £1 million a year on construction
You may be a sole trader, in a partnership or own a limited company.

If you’re not sure if you need to register, check who is covered by CIS.

Rules you must follow
You must register for CIS before you take on your first subcontractor.
You must check if you should employ the person instead of subcontracting the work. You may get a penalty if they should be an employee instead.
Check with HM Revenue and Customs (HMRC) that your subcontractors are registered with CIS.
When you pay subcontractors, you’ll usually need to make deductions from their payments and pay the money to HMRC. Deductions count as advance payments towards the subcontractor’s tax and National Insurance bill.
You’ll need to file monthly returns and keep full CIS records - you may get a penalty if you don’t.
You must let HMRC know about any changes to your business.

Tax Saving

Tax savings - are you paying too much tax?

We recommend that our clients pay as much tax as they are legally obliged to pay, and no more!

The tax legislation contains many allowances and relief’s that will help you to minimise your tax liabilities. This is so whether the tax arises on earnings, profits of trade or gains when you sell chargeable assets.

Inland Revenue staff are not able to advise you on how to organise your affairs to minimise the amount of tax you pay. If you are looking to make savings and do not want to make a detailed study of tax legislation, you should seek professional advice. (For business clients our fees are tax deductible)

We have included a series of tax tips in this article which provide general commentary on various tax saving strategies.

• Employing spouse in your business - if you are self employed and your spouse helps out with general administration, or any other role, it is quite legitimate to pay your spouse a salary. Just follow sensible commercial rules and you will have no problem with the Inland Revenue. In particular pay a market rate for the type of work done, and number of hours worked. Sole traders with higher rate tax liabilities will benefit significantly from this arrangement.

• What about the Garden Shed? Are you selling that second or third home and want to reduce any capital gains tax that you may need to pay? The garden shed and other fixtures and fittings are treated as wasting chattels for Capital Gains Tax, i.e. when you sell them there is no tax to pay. Why not ask your solicitor to allocate part of the selling price in the contract to these items. Make sure you seek advice regarding Stamp Duty Land Tax when considering these issues.

• Low interest loans provided by employers - providing you are not a director, it may be possible for a company to lend an employee up to £5,000 with no tax complications. This can be a useful if say the employee needs to buy out his company car to avoid benefit in kind tax charges.

• Capital Gains - Using Home as Office - if you claim tax relief for the use of a room as an office you can avoid any possibility of CGT on a sale of your home if you make sure that the room is not used exclusively for business. A portable TV and your golf clubs stored in the home office could be sufficient.

• Valuing Stock to save tax - if your tax bill for the year is looking decidedly on the high side, take a fresh look at your stock valuation at the end of the year. Stock should have been valued at cost, but can be valued at net realisable value if this is a lower figure. In simple language this means valued at what you could sell the stock in an open market sale. Lowering the value of closing stock will £ for £ reduce taxable profits.

• Recover VAT on invoices that you have paid or received before you register for VAT by including the input VAT on your first return. Make sure you have the VAT invoice and keep a schedule of the adjustments you have made.

How we can help.

The tax tips set out above cover just a few of the strategic tax planning solutions that we can offer.

If you would like to discuss any of the issues raised in this article, do get in touch. Whatever your planning needs we will endeavour to find a tax saving scheme to suit your circumstances - make sure you contact us as more specific planning tips may be available for your business sector.

From your source books and records we will prepare your annual accounts that will form the basis of your tax return, whether you are a sole trader, partnership or limited company.

They will also be invaluable for providing information about your business to financial institutions for example for mortgage applications. We will endeavour to advise you on ways to strengthen your record keeping that will assist you in meeting your statutory obligations and managing your affairs.

Let us take away this hassle which causes many businesses concern and stress each year. We offer competitive pricing and are very flexible.

Call us now on  

  01617858688 / 07484866762