What is a CIS Tax Rebate?

What is a CIS Tax Rebate?

A CIS Tax rebate is an overpayment of Income Tax and happens when the CIS deductions over the year is more than the real Tax liability. CIS Tax is deducted by the paying contractor and is a measure legally enforced by HMRC to ensure that workers in the construction industry pay the appropriate amount of Tax.


How is a CIS Tax Rebate Calculated

The CIS Tax that is deducted throughout the course of the Tax year is essentially put to one side, the following example might help explain how it works:

John Smith earned £25,000 Gross in the year to 5th April 2018. CIS Tax deducted was £5,000. When we prepared his Tax return and after deducting allowable expenses we calculated his Tax liability was only £1,500. Deducting the earlier CIS Tax that had been paid meant that he was due a £3,500 CIS Tax Rebate.


How To Maximise Your Tax Rebate

To maximise your Tax refund, you need to ensure that during the preparation of your Tax return you are claiming all allowances and expenses where possible. Some of the following areas of expenditure would be as follows:

  • Travelling expenses, including public transport, toll fees and parking
  • Tools and equipment
  • Materials
  • Personal protection equipment (PPE)
  • Telephone costs
  • Internet costs
  • Using your own home as an office


How Long Does it Take for Your CIS Tax Rebate?

A CIS Tax rebate would typically take around two to three weeks to be repaid by HMRC if the claim is requested by bank transfer. If you required a cheque repayment, it takes HMRC slightly longer to raise the cheque in the accounts department. At CISTaxRebates will always submit your Tax return electronically which also speeds up the repayment process.


Time Limits For Making a CIS Tax Rebate Claim

Technically if you are working in the CIS industry, you are self-employed and as such, you should file your Tax return with HMRC by 31st January following the end of the appropriate Tax year. It is possible to backdate CIS Tax Rebate claims, but this involves preparing Tax returns for the previous years. Penalties may apply if you are late filing your Tax return, in addition to that, you can only go back four Tax years.

It is generally recommended that you complete your Tax return as soon as possible once 5th April passes. At least to ensure that you get your Tax rebate quickly.