Construction Industry Self Assessment Checklist

As a self employed person working under the Construction Industry Scheme (CIS), you should be registered for Self Assessment from when you start. The self assessment will then work out what tax and National Insurance you need to pay which is normally offset by the deductions made from your income by your CIS contractors.

We need to understand what your total income was (including the CIS that was deducted) and what expenses we can claim to help reduce your profit and ensure you pay as little tax as possible. Below we summarise things that we can claim although it will vary from case to case depending on exactly what you do and how you do it.

Business records

HMRC expects you to keep good records of your income and expenses including bank statements, cheque books stubs, receipts for all purchases, sales invoices and and till rolls, mileage logs, details of stock at year end etc (where applicable).

You must ensure your records are accurate. HMRC can and often do challenge any income and expenses to ensure that the right amount of tax is being paid, so it is important that you make every effort to keep everything you can. Records must also be kept for at least five years after the 31st January submission deadline of the relevant tax year eg if you send in your 17-18 Self Assessment by 31st Jan 2019, you must keep the records until at least the end of January 2024.

HMRC’s key test on whether an expense can be claimed is: “was it incurred wholly and exclusively for the purpose of the trade?”. If you can answer yes to that question then it is claimable. Do remember though that some expenses such as mobile phones could be split between personal and business use and we can pro-rate that accordingly.

There is a second measure called the “duality of purpose” test which means that expenses like clothes and food would be incurred anyway and so are not claimable UNLESS the expense also meets the “wholly and exclusively” test above.

Office property and equipment

Claim for items you would normally use for less than two years in the business are allowable expenses eg stationery, rent, rates, power and insurance.

For equipment we will normally claim capital allowances against them which in most cases means we can claim the full amount in that tax year.

We cannot claim for non-business use of premises, phones or other office resources.

Stationery

We can claim expenses for the following

  • phone, mobile, fax and internet bills (we may have to disallow some for personal use)
  • postage
  • stationery
  • printing
  • printer ink and cartridges
  • computer software both one off and recurring licence costs.

Rent, rates, power and insurance

  • rent for business premises eg office or storage
  • business and water rates
  • utility bills
  • property insurance
  • security
  • use of home as office (see here for more detailed information)

Business premises

You can’t claim expenses or allowances for buying buildings or premises but you can claim expenses for repairs and maintenance of business premises and equipment.

Car, van and travel expenses

You can claim allowable business expenses for:

  • vehicle insurance
  • repairs and servicing
  • fuel
  • parking
  • hire charges
  • vehicle licence costs
  • breakdown cover
  • train, bus, air and taxi fares
  • hotel rooms
  • meals on overnight business trips
  • interest on loans and HP deals for purchasing the vehicle

You can’t claim for:

  • non-business driving or travel costs
  • fines (parking and speeding etc)
  • commuting to your regular place of work

You may instead want to claim a flat rate mileage allowance for your car, van or motorcyle instead.

For cars and vans you can claim 45p per mile for the first 10,000 miles per tax year then 25p per mile for any more mileage that tax year. For motorcycles there is a flat rate of 24p per mile regardless of the amount. It is worth noting you don’t have to use flat rate for all of your vehicles BUT once you start claiming the flat rates, you must continue to do so until you change that vehicle – you can’t simply swap and change each year. In order to claim the mileage allowance, you should record the trips in a log – find our downloadable template here or track them using an app on your phone.

When buying a vehicle for your business, we normally claim it through capital allowance calculations so we need to know exactly how much you paid for it, when and full details any loan or HP taken out to buy it.

Clothing expenses

This is always an odd one and comes back to the “wholly and exclusively to further the trade” conundrum.

You can claim for:

  • uniforms
  • protective clothing needed for your work eg helmets, gloves, safety boots
  • costumes for actors or entertainers

You can’t however claim for everyday clothing, even if it is only worn for work. HMRC say that clothing is a personal expense as you would not expect to arrive at work naked. Probably fair enough!

Staff expenses

You can claim for the following:

  • employee and staff salaries
  • bonuses
  • pension contributions
  • benefits
  • agency fees
  • subcontractors
  • employers National Insurance

You are not able to claim for carers or domestic help eg nannies or child care.

Reselling goods

You can claim expenses for the following:

  • goods for resale (ie stock)
  • raw materials
  • direct costs from producing goods

You can’t claim for:

  • any goods or materials bought for private use
  • depreciation of equipment – we take care of this through capital allowances instead

Legal and financial costs

Some accountancy, legal and other professional fees can count as allowable expenses:

  • Accountants – do note that the part of the accountants costs for your personal Self Assessment is not claimable, only the costs for accountancy, VAT, Payroll etc. Another bizarre one, but true!
  • Solicitors, surveyors and architects for business purposes are fine
  • Professional indemnity insurance

You can’t claim for:

  • The legal costs of buying property and machinery (these are claimed under capital allowances)
  • Fines for breaking the law (not just motoring fines)

Bank, credit card and other financial charges

You can claim for the following:

  • bank, overdraft and credit card charges
  • interest on bank and business loans
  • hire purchase interest and charges
  • leasing payments
  • alternative finance payments eg Islamic finance

You can’t claim for the repayment of loans or overdrafts eg the capital element of any loan.

Insurance policies

You can claim for any insurance policy for your business eg public liability

Please note that policies designed to cover you personally while you are ill or injured such as income protection or critical illness cover are personal insurances and cannot be claimed.

When your customer doesn’t pay you

You can claim for amounts included in your turnover that you won’t ever receive from your customer – known as bad debts – as long as you are sure you will not ever receive them.

You cannot claim for:

  • debts not related to turnover (ie personal debts)
  • debts related to disposal of assets such as land, buildings and machinery
  • bad debts that are not properly calculated ie you can’t just say “oh about 5% of my sales are bad debts”

Marketing, entertainment and subscriptions

You can claim for:

  • advertising in newspapers or directories – whether physical or online
  • bulk mail or email advertising (mailshots)
  • free samples
  • website costs

You can’t claim for:

  • entertaining clients, suppliers and customers. This means drinks or meals out, gift tokens, presents etc
  • event hospitality

Subscriptions

You can claim for:

  • trade or professional journals
  • trade body or professional organisation membership if related to your business

You can’t claim for:

  • payments to political parties
  • gym membership fees
  • donations to charity – but you might be able claim for sponsorship payments. Please see here for details

Hopefully that gives you a good idea of what can be claimed and what not. Of course if you are not sure about anything, please contact us or simply put it in with your information and we will claim for it if it is allowed.

Of course, if you have any other sources of income eg employment, any property rentals or of course any State Benefits then these should also be reported. Use our other Self Assessment Checklists for each type of income and also check through our list of Taxable State Benefits for guidance.



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