How will my tax deductions be calculated?
The deductions are specified by HMRC who will give you a tax status when you register for the CIS scheme. My-CIS will verify your status with HMRC and will apply the specified deductions at the rate they have set.
In order for us to correctly make these deductions, it is important that we receive certain information on your registration forms, specifically you Unique Tax Reference and National Insurance number which we can use to verify you CIS status. If this information is missing and we cannot verify your status we are forced to make deductions at the higher rate of 30%. This should be avoided as any overpayments cannot be recovered until the end of the tax year as part of your self assessment. The current rates of Deduction are as follows:
• 30% for an unverified or higher rate contractor
• 20 % for a standard rate contractor
• 0% for a gross rate contractor