CIS Worked Example

March 5, 2023

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This guide was last updated on:
March 5, 2023

To illustrate how the construction industry operates a worked example follows:

Bob works as a subcontractor on a building site run by ABC Ltd, and earns £2,000 per month.

Before paying Bob, ABC Ltd will deduct 20% of his earnings and will pay him the remainder, in this example £1,600.  The £400 that is deducted is then paid to HMRC by ABC Ltd.

At the end of the tax year Bob will employ Suretax to file his self assessment.

At that point Bob will supply details and supporting evidence of all of the expenses he is intending to claim for.  Suretax will then calculate Bob’s income tax liability based on his grossed up earnings, minus all expenses that qualify.  Bob will be entitled to a rebate that is the difference between what he actually owes, and what ABC Ltd has deducted through CIS .

In most cases the tax liability will be much lower and potential rebates could be thousands of pounds.

The rebate is usually processed very quickly once the self assessment has been filed.

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