![CIS contractor](https://ta-support.nyc3.cdn.digitaloceanspaces.com/file-uploads/public/tGjt5dqvAHuRfEvhEHYiH4yMGGdn0Duo88GtFWOu.jpg)
Questions and Answers
Choosing to be a limited company or sole trader as a contractor
As a CIS contractor on top of the normal issues surrounding whether to be a limited company or a sole trader, are there any CIS specific issues to be aware of?
From a Construction Industry Scheme (CIS) point of view ONLY, there is another factor that can affect your decision as a contractor when thinking about whether to become a limited company or not.
Being a sole trader, any CIS you and your business suffers can only be reclaimed via your own self-assessment tax return. This means that you can only claim it once the tax year is up, so you do have to wait up to a whole year to get any relief. This relief is obtained as the CIS you suffer is, in essence, a payment on account of your tax bill.
Whereas if you were a limited company, then you are allowed to offset any CIS your business suffers against any CIS, PAYE tax or National Insurance deductions that you are due to pay over to HMRC each month. This means that your company gets the relief much sooner and throughout the tax year.
*This is only looking at becoming a Limited Company from a CIS suffered point of view and takes no consideration of other factors that could affect this decision. Please seek advice before taking any action.
Date published 23 Apr 2021
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.Choose the right accounting firm for you
Running your own business can be challenging so why not let TaxAssist Accountants manage your tax, accounting, bookkeeping and payroll needs? If you are not receiving the service you deserve from your accountant, then perhaps it’s time to make the switch?
Local business focus
We specialise in supporting independent businesses and work with 80,684 clients. Each TaxAssist Accountant runs their own business, and are passionate about supporting you.
Come and meet us
We enjoy talking to business owners and self-employed professionals who are looking to get the most out of their accountant. You can visit us at any of our 409 locations, meet with us online through video call software, or talk to us by telephone.
Switching is simple
Changing accountants is easier than you might think. There are no tax implications and you can switch at any time in the year and our team will guide you through the process for a smooth transition.
See how TaxAssist Accountants can help you with a free, no obligation consultation