Construction Industry Scheme (CIS) Payments

In the past I have always invoiced for work and been paid gross, then dealt with all tax to be paid on my tax return at the end of the year. Unlike the PAYE scheme which can be updated by HMRC to reflect changes in tax status and tax free amount of the employee, the CIS scheme deducts 20% of all payments, and issues slips that are used to declare tax already paid on the self assesment at the end of the year, and then a refund is usually then required to be issued.
Due to Covid, I have started to do some electrical work for someone else, who deals with lots of construction companies that require him to be part of the CIS scheme, which means he deducts 20% of the invoice and pays me net. Since I haven’t earned more than £30k in the construction industry in the last 12 months I cannot apply to be paid gross - which would be much easier to deal with accounting for, and fit around my small number of other bits of work which have continued.

How should I label CIS payments in coconut, and account for the tax already paid through the CIS scheme in the app?
Many thanks

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Hi @Jake_Rowe,

Many thanks for getting in touch with regards to CIS deductions.

It’s a super interesting piece as we are looking at how we can support NET payments better.

As an accountant, when it comes to preparing a tax return, the key figure I’m looking for is the amount of CIS suffered for that tax year.

My recommendation would be to add a ‘note’ to any payments that you receive NET and that have suffered a CIS deduction. When you come to prepare your tax return you will be able to collate the figure for the tax year and this will be reduced against any liability that you have.

Any questions please do let me know or reach out in-app.