Another service we offer here at CIS Pay is the setup of your own limited company. This can be a daunting experience for some which is why we are here to make it as straight forward as possible.
There are many benefits of the CIS, and having a CIS registered limited company can benefit you as a contractor even more than working through a CIS registered umbrella company. The main benefits are listed below;
You can claim travel and subsistence expenses
From 6th April 2016, contractors and freelancers who work through umbrella companies, and who operate inside IR35, are no longer able to receive tax relief on Travel and Subsistence expenses that are incurred during the course of work. Individual contractors in construction are not exempt, which means that even if you work through a CIS registered umbrella company you will not be able to claim any Travel and Subsistence expenses.
You have the option to apply for gross payment status
When your limited company has gross payment status, you can enjoy gross payments, excluding VAT, from your client without the initial 20% tax deduction (CIS) or 30% deduction (non-CIS). To be eligible for gross payment status, HMRC will look at your company’s turnover for the last 12 months and require you to meet some additional criteria which we can help you with.
Limited Company Setup
You can opt for the VAT Flat Rate Scheme (FRS)
With a limited company, you can apply to be VAT registered on the Flat Rate Scheme if your taxable turnover (excluding VAT) for the next year will be less than £150,000. When you are on the FRS, you pay a fixed rate of VAT to HMRC, which will usually be 14.5% of turnover for labour-only building or construction services. When you bill your client for your services plus 20% VAT, you will keep the difference between what you receive as VAT payment from your client and the VAT you pay to HMRC. See an example below:
Example: You bill a client for £2000, and add 20% VAT, totalling £2,400. If your VAT flat rate is 14.5%, your company will pay £348 in VAT to HMRC. As your company received £400 in VAT but only paid HMRC £348 in VAT, it will have an additional profit before tax of £52. This income would be available to distribute after Corporation Tax is deducted.
CIS Pay Ltd provides a bespoke CIS accountancy service, which includes limited company set up within 24 hours, help setting up your business bank account, registration for the CIS, VAT (and the VAT Flat Rate Scheme if you wish) and PAYE. We will also complete your bookkeeping and payroll, and provide you with unlimited tax advice tailored to you and your business.
Self-employed / Working in the Construction Industry
In April 2014, there was a change in law for the self-employed that are subject to supervision, direction or control and that provide their services via an intermediary If this applies then payment made to you must be subject to PAYE and NI.
If we can confirm that you are not under supervision, direction or control, we will engage with you under a contract for services and take care of all your administration, such as dealing with your invoices and remittance advice slips.
If you are self-employed and not under supervision, direction or control in the construction industry, then we will verify your payment status under the CIS and pay you subject to the required deductions.
You will be required to complete a self-assessment tax return at the end of each taxyear to bring your tax affairs up to date. The deadlines for submission of a self-assessment return can be found on the Gov.uk website.
If you meet the criteria of being classified as being self-employed you will be able to benefit from the following;
We understand the burden associated with recruiting and engaging temporary workers, and the need to be as cost-effective as possible. We specialise in the engagement of both limited company contractors and self-employed sub-contractors to provide services to you and we take care of all the associated administration and payroll issues, allowing you to focus on the more important aspects of your business.
You would refer individuals to us and from then on, we undertake all the required steps from engagement to payment, meaning your business has less risk;
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