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What Materials Qualify For CIS?
Where you are required to take CIS deductions for a subcontractor, the CIS tax rate is applied from the VAT-exclusive costs of:
• Labour Element
• Travelling expenses/subsistence (including fuel and accommodation costs)
• Profit element only on materials
This means CIS does not apply to qualifying materials! It is therefore important to know what materials CIS applies to and doesn’t.
Qualifying CIS materials include:
• Material costs
• Plant hire if costs are incurred to a 3rd party (if the subcontractor owns the plant it is not deducted)
• Fuel for the plant and machinery
Example:
A contractor has received an invoice from a subcontractor. The verification process has been completed and has been instructed to deduct 20% as the CIS tax rate.
Labour £4,000
Materials £600
Plant Hire £300 (subcontractor)
The above totals £4,900 so you less the qualifying materials which are £900 = £4,000. This amount is then charged to CIS at the tax rate of 20%. This gives CIS to deduct of £800
If you need any further information regarding CIS message us today or take a look at our CIS Resource Hub here.
Frequently asked questions
This article has been provided for information purposes only. You should consult your own professional advisors for advice directly relating to your business or before taking action in relation to any of the provided content.
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Written by the team at:
Saint Accountants
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