You know you need to submit your Self Assessment return, but that doesn’t make it easier to find the time to get it done. It also doesn’t mean you’re confident you’ll get it all right.
Getting it wrong affects your take home pay: miss out allowable expenses or CIS deductions and you lose money. Mistakes can be costly in other ways: HMRC can fine you for not ‘taking reasonable care’ and submitting errors in your return.
To help, we’ve put together our top tips on what to look out for when submitting your Self Assessment return.
1/ CIS refunds – are you paying too much tax?
When you work as a subcontractor under the Construction Industry Scheme (CIS) a percentage of your pay will be deducted by the contractor. This is an advance payment against your tax and National Insurance bill.
If you overpay, you reclaim the money through your annual self assessment. You do this by recording your income and your CIS deductions on your self assessment. Make sure you keep all your invoices and CIS vouchers (or CIS tax deduction certificates). Using a finance app can help you store them digitally so they’re always easy to find.
2/ Allowable expenses – claim them all
It can be difficult to figure out what counts as expenses and many who are self employed, like yourself, don’t claim all the expenses they’re entitled to. Sometimes this is because you don’t think of the costs as business related (e.g. mobile phone bill or home office costs) or you may worried about making a wrong claim and HMRC calling an investigation.
Here’s a list of the commonest allowable expenses for labourers & construction workers:
- Any materials used for your work
- Consumable tools
- Repairs & maintenance of equipment
- Business related insurance
- Protective clothing such as Overalls and Work Boots
- Laundry & Cleaning
- Telephone Landline – Business use
- Mobile Phone – Business Use
- Postage & stationery (including printer cartridges)
- Use of home as office
- Trade magazines and subscriptions
- Bank charges on business account
- Accountancy & bookkeeping fees
- Fares & Travelling expenses
- Subsistence (if working away from home)
- Vehicle repairs & maintenance (or a percentage if you use the vehicle outside work)
- Fuel (or a percentage if you use the vehicle outside work)
- Road tax, insurance & MOT (or a percentage if you use the vehicle outside work)
3/ Capital Allowances – tax on vehicles or equipment for work
If you have any doubts you can always check with a bookkeeper or other finance professional.
If you purchase a car, van, truck or plant & equipment that you will use for work you can claim an allowance of up to 100% of the value of the item. That means this amount is deducted from your profits before your tax is calculated, therefore lowering your tax bill.
For cars there is an allowance of 18% per annum (in most cases). For vans, trucks and machinery you the allowance is usually 100% in the year you purchased the item. There are several different categories of capital allowances so you might want to ask for some help to make sure you get it right on your tax return.
And finally … our top piece of advice?
Get back to what you enjoy about working for yourself by making your financial admin easier. A little bit of time to set things up properly will save you time and stress later.
We already work with many construction businesses so we understand the details of CIS and tax for construction.
We can help you set up an app to keep your records up to date using your phone. If they’re set up right, they’re really easy to use. We can even process your self assessment for you and look for anything you may have missed, so you can be confident it’s all right.
If you’d like some advice we’re always happy to have a friendly chat: call us on 01825 763378 or email email@example.com.