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Ltd company taxation

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Ltd company taxation

Postby Andyhill79 » Thu May 11, 2017 9:33 pm

Hi, I have recently set up a ltd company as we are 3 electricians.
When we invoice our clients who are mostly other building companies our tax code states that they deduct 20% tax on our labour.
We then pay our wages month end and deduct our own tax.
We have an issue as we already lose 20% of what we earn from our invoices so this creates a big issue with cash flow in our business.
can anyone shed some light on how this should work and what we need to do.

Many thanks Andy Hill

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Re: Ltd company taxation

Postby GlobalTaxAdviser » Fri May 12, 2017 9:19 am


I would try to apply for Gross Certificate but depends on if your paid NI/Tax on time when self employed and in the Limited Company, Turnover per director must be more than 33K

Kind Regards


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Re: Ltd company taxation

Postby SteLacca » Wed May 17, 2017 3:28 pm

In addition, you really need an accountant. The way you have described the way you work is certainly not the most tax efficient.

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Re: Ltd company taxation

Postby AmanSood » Mon May 22, 2017 8:57 am

Hi Andy

Just to add, the 20% deduction is being made under the construction industry scheme. This deduction can actually be offset against any PAYE/NIC withheld from the pay of your electricians (if there is any) otherwise as previously mentioned your only option is to apply for a gross payment status. This would mean that no 20% deductions would be made on payments to you. However, to apply for gross payment status, You must show HM Revenue and Customs (HMRC) that your business passes some tests. You’ll need to show that:
1) you’ve paid your tax and National Insurance on time in the past
2) your business does construction work (or provides labour for it) in the UK
3) your business is run through a bank account
4) HMRC will look at your turnover for the last 12 months. Ignoring VAT and the cost of materials, your turnover must be at least £30,000 for each director of a company, or at least £100,000 for the whole company. If your company’s controlled by 5 people or fewer, you must have an annual turnover of £30,000 for each of them.

Advising on UK employment, expatriate and personal taxes

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Re: Ltd company taxation

Postby LozaACCS » Wed May 24, 2017 8:43 pm

You could also suffer the CIS and elect to offset these deductions against your CT liability by claiming that amount as CIS deductions on the employers annual return, it is unfortunately a painful process, it involves sending letters to both the employers office and to the corporation tax office, both of which in my experience are ignored until the debt management office force them to speak to each other.

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