How can I increase my tax rebate?
This really applies more to those in the construction industry, as with CIS they are more likely to get a rebate than other tax payers. So how can you maximise this? Let's start with why you get a refund in the first place. Those in the construction industry are stopped tax at source as they go along.
Most of us receive a tax free allowance each year (currently the standard allowance is £12,700). So if you earned say £20,000 this year and all under the CIS scheme, you'd be stopped 20% ordinarily (so receive £16,000). How does this compare with what you should have taken home? well, £12,700 tax free, so taxable income is £7,300 and tax at 20% is £1,460. National insurance would be £1097. So in total, £4000 tax has been deducted through CIS, but the total tax and NI bill is only £2557. Therefore a rebate of £1442 is due.
The more profit you earn the less the rebate. This is because NI and Income tax are 29% and only 20% is normally deducted at source so there does come a point where no rebate is due or you even owe some tax as not enough has been deducted.
In order to increase the rebate then the solutions is to have a lower taxable profit. So how can we achieve this? The simple answer is to claim all of the allowances and expenses you are entitled to. Here are TSA this is part of what we do. We don't just submit tax returns, we want to ensure that our clients don't have to pay more tax than they have to. If you've bought a van, tools or equipment, then there is a good chance you'll be entitled to some allowances you may not be aware of. If you'd like to ensure you maximise your rebate, give us a call to arrange your free initial consultation and see how we can ensure you keep more of your hard earned money and maximise your rebate.