Questions and Answers
How do I get a tax refund if I am a subcontractor?
I’ve been working as a labourer for a couple of years now. One of my friends mentioned that he'd just got a big tax refund. How do I get a tax refund?
By Andy Gibbs, ATT, CTAIf you are a subcontractor (and you’re not trading through a partnership or limited company) you are self-employed and therefore should be registered for self-assessment. Under self-assessment, you will need to send HM Revenue and Customs (HMRC) a self-assessment tax return each year.
You should also consider registering for the Construction Industry Scheme (CIS) if you work for a contractor. Under CIS, the contractor will deduct 20% from your payments. If you don’t register for the CIS scheme, the contractor will deduct 30% from your payments instead.
The contractor will pay over the deductions to HMRC and these amounts will count towards your tax and National Insurance bill.
At the end of the tax year (6th April to the following 5th April), you should send HMRC a tax return which shows:
- the full amounts on your invoices as income (or from the statements you’ve had from the contractor)
- any deductions contractors have made in the ‘CIS deductions’ field
- any allowable business expenses you have incurred
HMRC will work out your actual tax and National Insurance bill and then take off the amounts your contractor deducted from you.
If you’re due a tax refund, HMRC will pay the money back.
You are now able to submit your 2023/24 tax return and if you are due a refund it can be paid to you now.
Date published 23 Apr 2021 | Last updated 23 Apr 2024
This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.
Andy Gibbs, ATT, CTA
Andy is a qualified Chartered Tax Adviser (CTA), holds the STEP Advanced Certificate in Trust and Estate Accounting, and has dealt with both tax compliance and tax advisory projects across a range of industry sectors. He joined us from one of the big four accountancy firms where he looked after the affairs of high-net-worth individuals and private equity executives. Prior to this he worked at a local regional practice where he dealt with the affairs of owner managed businesses and private individuals. In January 2024 Andy was promoted from Head of Group Technical, to Director of Services, leading two of our Group companies which provide payroll and tax consulting support to our network of accountants. Andy also manages a highly qualified and experienced team providing technical support and offering practical solutions in relation to the accounting, tax and practice needs of TaxAssist franchisees and staff.
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