Im hoping someone can tell me exactly how this works.
Im a LTD company im the only person within the company and have just registered CIS (even though I don't do construction i've told I have to) so tax is paid at source two questions really
1. Can I register gross status before I turn over £30k?
2. As I will be paying 20% at source through the CIS would this cover my co-operation Tax?
Ive Spoken to HMRC and CIS and various accountants and no one it seems can answer these two seemingly simple questions.
The last accountant I spoke to said I would have to pay 40% Tax 20% CIS + 20% CT how the hell does that work??? this effectivly doubles my tax liability
Please I need some help here feel like binning it all and going on the dole paying 40% would kill me
1. I'm afraid you won't get a gross payment status under £30k, in fact I think that's the figure for sole traders, companies are probably more than that...need to check that out for you as not sure off top of my head.
2. In the past you would offset the CIS deductions against corporation tax (I like your idea of co-operation tax better!). Nowadays if you do not have PAYE/NI and CIS liabilities (If you had subbies you deducted CIS from) then you have nothing to offset the CIS you have suffered against. In such cases you have to write to HMRC to claim back the CIS at the fiscal year end. Your Corporation Tax will be 20% of your taxable profits, so in effect if you get your CIS tax back that could be more (or less!) of the tax owed by the company. It is likely that your accountant will set you up under PAYE at a salary that uses your personal allowance up and other income would be received via a dividend and from the figures you have said there would be no further tax liability (This is how I set my clients up).
1. I'm afraid you won't get a gross payment status under £30k, in fact I think that's the figure for sole traders, companies are probably more than that...need to check that out for you as not sure off top of my head.
I think it will be £30,000 per Director so as he's the only Director it will be £30,000.
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Ive only been set up since 17th Jan this year and stopped trading 3rd March but was hoping to start trading again 27th Oct.
When I was trading (doing the same work as I intend to restart in Oct) I didnt require CIS so I was paying myself £150 a week and taking £2000 dividends a month and put 20% of the gross away for tax returns
Will I be worse off now that the CIS has come into play?
The really annoying and confusing thing is I dont even do constuction I work on Royal Navy Ships in dry dock??
I've just been on HMRC site and it says, as Peasie indicates, that for a company it's £30k per director but adds 'or at least £200,000 for the whole company', sounds like a £200k minimum but that seems harsh, perhaps I'm reading that wrong..do you know Peasie? The £30k by the way is purely on the labour element, co no materials included in this.
If you were paying yourself £150 per week, did you have a PAYE registration set up..you need to have and to submit under the RTI regulations (Do you have professional advice? Or even dodgy accountant's advice!!). You should be no worse off under CIS, would have said you would be worse off from a cash flow point of view but since you were sticking 20% away for tax anyway there will be no real difference. Just think of the CIS as the bank account for your tax.
clarification on the £200k...£30k per director (as per Peasie) but if 7 or more directors, £200k is fine , so in essence the amount comes down per director.
ok thanks I can only assume that paystream who were running my accounts for me have done so.....yes I know I have a lot to catch up on.
It just paniced me when I was told I would have to pay CIS and CT ie 20% both making 40%
My understanding as it stands at this moment is I will pay CIS but when my CT accounts are done the CIS payments wil be offset so I should in essence have virtually zero returns to pay for my LTD company because CIS have already taken them....yes?
So if I keep it as it was before IE continue to pay myself £150 per week and £2000 divs a month id no longer have to put away any extra for tax purposes because CIS would have effectively saved me a job?
-- Edited by richard7467 on Saturday 13th of September 2014 06:03:28 PM
-- Edited by richard7467 on Saturday 13th of September 2014 06:14:28 PM
Yes, you can offset the CIS tax deducted at source against your CT liability. Your accountant will need to write to HMRC to ask for the CIS tax to be offset against CT as they won't do this automatically.
If all your income has CIS tax deducted at source this should be sufficient to cover all your CT liabilities.
Your accountant should have been able to explain all this to you quite simply. I have only heard bad things about Paystream and they are very expensive, I have taken a few clients from them and I wasn't impressed by the quality of their work!!
Im hoping someone can tell me exactly how this works.
Im a LTD company im the only person within the company and have just registered CIS (even though I don't do construction i've told I have to) so tax is paid at source two questions really
2. As I will be paying 20% at source through the CIS would this cover my co-operation Tax?
I'm struggling to see why you need to be paying CIS if you're not in construction. Please can you provide further info? If you are a contractor working for just one company then you may be classed as coming under IR35. But my understanding is that all income would be treated under the paye scheme .The idea is to remove the NI advantage of receiving dividends.
In answer to question 2 assuming that you are bona fide CIS then the answer is yes, it should. Come next April you can make a claim for the CIS deductions that have been made and either have it refunded or ask for it to be offset against corporation tax. You should end up with some net rebate because the CIS won't have accounted for any business expenses incurred.
