How to record CIS deductions as a subcontractor
On building work a contractor may take tax off before paying you. Work out the deduction, record the full income and set it against your bill.
This path is practice in how the records and the sums work. It is not tax advice. Any rate or allowance in a question is an example for that question, so check GOV.UK for the current figures.
Most sole traders are paid in full. In building work the Construction Industry Scheme (CIS) can apply: the building firm takes a deduction off each payment to a subcontractor and passes it to HMRC.
The deduction is worked out on the labour part of the invoice. The cost of materials is left out of the sum. Dev is not registered for VAT, so there is no VAT on his invoices.
The rate depends on whether the subcontractor is registered for CIS. The rate in this room, 15%, is made up for practice. The real rates are on GOV.UK.
| Line | Amount |
|---|---|
| Labour: painting six new flats | 1,400.00 |
| Materials: paint and filler | 360.00 |
| Invoice total | 1,760.00 |
You write a journal entry, pick the right answer and find the mistake in a table.
You work out a figure.