Tax, CIS and materials

[Scott_D]

Got some work to do for a builder who wants to deduct 20% at source
Im fine with this for labour but what happens about materials that I Buy?

 

[Harvest Fields]

I presume that the answer would be, that he would need to buy them. Or you invoice parts separately.
Does anybody else have a different answer?

 

[Last Plumber]

He can only take the 20% from labour only.

 

[Harvest Fields]

He can only take the 20% from labour only.

So does that mean he needs to split the invoice when he sends it?

 

[Last Plumber]

So does that mean he needs to split the invoice when he sends it?

It would be better to show Labour and materials separate, then there's less chance of any mistakes.

The Builder will then pay you the full amount of the invoice minus 20% off labour only and he will send the tax amount he took to the revenue. That amount will be deducted from your tax return so you don't pay twice. I make sure my accountant is aware, just in case !

 

[Chalked]

Here's 2 examples. All will be £500 labour and £1000 materials.
Your invoice would be shown as below

1. your vat registered and the job is subject or vat.
Materials. £1000
Labour. £500
CIs deduction £100
Vat. £300
Total £1800

Total to pay on this invoice £1700

2 your vat registered and the job is new build, so not subject to vat.
Materials. £1000
Labour. £500
Cis deduction. £100
Total. £ 1500
Total to pay on this invoice £1400

If your not vat registered, it's just the same as no vat.

 

[Harvest Fields]

It would be better to show Labour and materials separate, then there's less chance of any mistakes.

The Builder will then pay you the full amount of the invoice minus 20% off labour only and he will send the tax amount he took to the revenue. That amount will be deducted from your tax return so you don't pay twice. I make sure my accountant is aware, just in case !

That's where the CIS number comes in

 

[Harvest Fields]

That's where the CIS number comes in

Sorry was typing then got distracted with the above post

 

[Old Account]

Here's 2 examples. All will be £500 labour and £1000 materials.
Your invoice would be shown as below

1. your vat registered and the job is subject or vat.
Materials. £1000
Labour. £500
CIs deduction £100
Vat. £300
Total £1800

Total to pay on this invoice £1700

2 your vat registered and the job is new build, so not subject to vat.
Materials. £1000
Labour. £500
Cis deduction. £100
Total. £ 1500
Total to pay on this invoice £1400

If your not vat registered, it's just the same as no vat.

Thanks @Chalked for the great explanation. I was just thinking a couple of days ago how it works. Much appreciate it.

 

[Scott_D]

Thanks for the replys
Very helpful

 

[cr0ft]

It would be better to show Labour and materials separate, then there's less chance of any mistakes.

The Builder will then pay you the full amount of the invoice minus 20% off labour only and he will send the tax amount he took to the revenue. That amount will be deducted from your tax return so you don't pay twice. I make sure my accountant is aware, just in case !

You should also receive an email/something in writing from them at the end of each month indicating how much tax they have paid to HMRC on your behalf.

 

[AWheating]

I invoice with materials separate and I also tell them how much tax they must pay to IR.

I list it as follows
Labour + £000
Cis @20% - £000
Sub total £000
Materials +£000
Total payment £000

With some Terms like - Cis tax to be paid to IR and a monthly CIS statement to be issued to ( name ) as required by law.

Also you may need to know that fuel for traveling should be in with Labour.