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CIS Tax Deduction Calculator

Manage your finances effortlessly with our CIS Tax Deduction Calculator

Designed for contractors and subcontractors in the UK’s Construction Industry Scheme (CIS), this tool helps you accurately calculate the tax deductions from your payments. Avoid surprises by understanding exactly how much tax is withheld and how much you’ll take home, making it easier to plan your budget and stay compliant with HMRC requirements.

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CIS tax deduction calculator

This calculator helps calculate any necessary CIS tax deductions.

The cost of all labour charged (net of travel and subsistence and any VAT charged by the sub contractor).

The cost of all materials supplied (Include VAT if the sub contractor is not VAT registered).

Is the subcontractor verified with HMRC for payment under deduction?

Note: These calculations are only for illustrative purposes and are not a substitute for professional advice.

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What is CIS Tax Deduction?

The Construction Industry Scheme (CIS) is a UK tax system introduced by HMRC to ensure proper tax compliance within the construction sector. Under CIS, contractors are required to deduct tax directly from payments made to subcontractors and then forward those deductions to HMRC. These deductions typically cover the subcontractor’s income tax and National Insurance contributions. The standard rate of deduction is 20% for registered subcontractors, while unregistered ones may face a higher rate of 30%.

What is CIS Tax Deduction Scheme?
Why is CIS Tax Deduction important - accounting wise

Why is CIS Tax Deduction important?

CIS tax deductions are crucial for maintaining financial transparency and ensuring that subcontractors contribute appropriately to their taxes. For subcontractors, the deductions act as a prepayment towards their overall tax bill, with the potential for refunds or additional payments depending on their annual earnings and expenses. For contractors, complying with CIS rules helps avoid penalties and ensures smooth financial transactions within the industry. Understanding how these deductions work allows both parties to manage their finances effectively and meet their tax obligations.

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Content is for general information only. Always take advice.