Self Employed FAQs

Popular Questions
What is CIS?

The Construction Industry Scheme (CIS) is a UK tax scheme that is applicable to self-employed, sub-contractors in the construction industry.

Sub-contractors in construction need to register under CIS as well as being registered as self employed.
Further details on this are available directly from the HM Revenue & Customs (HMRC) CIS sub-contractors helpline on 0300 200 3210 (8:00am to 8:00pm, Monday to Friday) or via the HMRC website at https://www.gov.uk/use-construction-industry-scheme-online.

I work in the construction industry. How do I know that the work I do is covered by CIS?

A CIS status is defined by a clear set of rules to help you decide whether or not you fall within the scheme. As a rule, you need to be self-employed and as such your status is different to that of an employee working directly for a company under Pay As You Earn (PAYE).

If you're unsure about your compliance and require further advice and information, you should contact HMRC CIS helpline on 0300 200 3210 (8:00am to 8:00pm, Monday to Friday).

 

All Questions
Can I claim expenses as self-employed (CIS)?

Yes. You can claim your business expenses annually when you complete your self-assessment tax return. Remember, you must keep your expense receipts for up to six years in the event that HMRC wish to enquire into your tax return.

We have negotiated with a number of accountancy firms a special rate for completing self assessment tax returns for our clients. Please contact us should you require their services.

Do I need to pay National Insurance (NI) as self-employed (CIS)?

You pay 'Class 4' National Insurance contributions as a percentage of your taxable profits – for tax year 2017 to 2018, you pay 9% on annual taxable profits between £8,164 and £45,000 and 2% on any taxable profit over £42,385. For further advice and information, contact the HMRC newly self-employed helpline on 0300 200 3504, between 8:00am and 8:00pm from Monday to Friday. 

Do I qualify for CIS?

You can only contract with Sprite under our CIS arrangements if:

  • the contractual chain in which you are working clearly states that you are under no SCD (Supervision, Direction and Control), and
  • you are genuinely self-employed.

There are a number of tests to determine if you are self-employed and in order to contract for Sprite and be paid under CIS, Sprite and you must be satisfied that you are in genuine self-employment.

HMRC provides guidance on how to tell whether you meet the self-employment tests or not; this guidance can be found on the HMRC website, which you may find useful. At Sprite we consider four key principals in determining your status, and we'll ask you to complete a work status questionnaire during your registration process. The key indicators we consider are:

  • Control
  • Financial risk
  • Mutuality of obligations, and
  • Substitution

As a guide, if you can answer 'Yes' to the following questions it is likely that you are self-employed:

  • You don't have to accept work offered to you, and can reject offers of work without compromising any future work
  • You regularly work for different clients
  • Having been provided with site instructions, you offer services without the need for high-level supervision
  • You decide your own hours of work, including whether to start early or finish late in accordance with site opening times and operational requirements
  • You have the option to send a substitute worker to a site to do work in your stead, though this worker may have to be approved in advance for health & safety purposes
  • If required, you provide your own tools and equipment as required
    If a job is not done to a satisfactory standard, you'll correct any defects without additional pay
  • The work you undertake is normally of a temporary nature that can be terminated or cancelled without notice
I work in the construction industry and want to be self-employed. How do I become registered under the Construction Industry Scheme (CIS)?

It's free to apply for CIS status with HMRC. If you're intending to work within construction, you'll want to register before you start doing so. If you don't register, deductions will be made from your payments at the higher rate (30%).

You can register by calling the HMRC CIS Helpline on 0300 200 3210 (8:00am to 8:00pm, Monday to Friday). You will be asked for the name of the business you want to register (your own name, should you trade under it as a self-employed individual), your address, date of birth and your unique taxpayer reference (UTR).

Self Assessment tax returns - how do they work?

If you have income from self-employment, you will be required by law to file an income tax return with HMRC. You must declare all your income in the return, and this is also where you can claim the expenses you incurred during the year.

The total amount of tax due is then calculated based on your taxable profit (which is your earnings minus any expenses claimed). Any tax payments you have already made (usually at 20%) during the year is set off against the total amount of tax due and you could end up with a tax refund if you have paid too much tax.

What CIS taxes and deductions can I expect to pay?

Taxes

Each week, Sprite will make the appropriate tax deduction from you and remit this as a payment on account on your behalf to HMRC.

  • Most sub-contractor deductions are made at 20%. In certain circumstances CIS subcontractors will be verified for 0% (gross) deductions
  • If HMRC cannot match your details under CIS, or if they instruct us to do so you will be deducted tax at 30%. If you have income from self-employment, you will be required by law to file a Self Assessment tax return with HMRC. The total amount of tax due is then calculated based on your taxable profit (which is your gross income minus any expenses claimed)
  • Any tax payments you have already made, usually at 20%, during the year is set off against the total amount of tax due and you could end up with a tax refund if you have paid too much tax
  • It is also worth noting that if your income for the year reaches the higher-rate tax thresholds, you may also have more tax to pay. Your own accountant will be able to advise you on this point
What if I am working as self-employed, but not within the Construction Industry Scheme?

Sprite will be able to engage you as a sole trader. You will be paid gross, and we will provide you with an illustration to confirm the approximate amount you will need to set aside from your payments to satisfy your tax liabilities as per your self-assessment.

What tax deductions will be made from my pay under the CIS scheme?

When you provide Sprite with your UTR number, we will contact HMRC to verify your CIS status. This will determine the rate of deduction made from your gross pay. Most sub-contractor deductions are made at 20%.

In certain circumstances, CIS subcontractors will be verified for 0% (gross) deductions. If HMRC cannot match your details under CIS or if they instructed us, you will be deducted tax at 30%.

Where do I find further information on CIS?

The best place to find further information on any of the above, as well as to keep yourself up to date on changes in the CIS legislation, is from the HMRC CIS helpline on 0300 200 3210 (8:00am to 8:00pm, Monday to Friday) or via the HMRC website at https://www.gov.uk/topic/business-tax/construction-industry-scheme

You may also contact your Account Manager at Sprite on 01252 705 288 for further assistance.

Will I receive holiday pay if I am self-employed (CIS)?

As you are a self-employed subcontractor, you are not entitled to statutory paid annual leave. It's your responsibility to find work and make appropriate financial provision to allow yourself to take breaks from work.

Sprite has worked with thousands of CIS self-employed workers over the years and they have all received the benefits of using Sprite CIS. If you have any questions about Sprite CIS, please call our Commercial Team on 01252 705 288 today.

Will Sprite administer my annual Self Assessment tax return?

You must declare the income received for the self-employed work you undertake on behalf of Sprite and you are responsible for completing and filing an annual tax return with HMRC. You are also responsible for paying any tax due once HMRC has processed your tax return.

Although we do not prepare the tax return on your behalf, your business's accountancy advisors will normally offer this service, or alternatively, we can recommend IN-SYNC Tax LLP, who can help to process your expenses claims, calculate any tax owing and submit any claims for tax refunds.

Not sure which route to take?

Get in touch with our Customer Services team to find out more

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