What can a self-employed builder claim for?
As a self employed builder, whether you are paid through PAYE or work under the Construction Industry Scheme (CIS), you may not be aware of the expenses you can claim back. The Construction Industry Scheme is used by HM Revenue and Customs (HMRC) to collect tax from subcontractors in the construction sector. Any self employed builder is eligible to register for this scheme. When you are self employed, you commonly are required to spend money on items that you need for your business. These costs can be deducted from your income when you calculate your tax, ensuring that you only pay tax on your profits. From capital expenses to administrative costs, discover the expenses that you can claim for below.
What can I claim as expenses?
Capital expenses
If you are a part of the Construction Industry Scheme, you are eligible to claim capital expenses provided they are purchased for the purpose of the business. Capital expenses are commonly more expensive items, such as the purchase or hire of vehicles or computer equipment. Unfortunately, if you are a builder who is paid under PAYE, you cannot claim for these items.
Motor vehicle costs
The motor vehicle must be purchased exclusively for business purposes to enable you to claim tax back from the purchase. Tax can be claimed back for expenses such as road tax, fuel and insurance. Similarly to capital expenses, you have to be a member of the Construction Industry Scheme to claim tax on this expense. If you are paid under PAYE, you are unable to claim for these payments.
Mileage costs
Mileage costs are classified as expenses given that the miles are incurred travelling to a temporary place of work that is not your usual workplace. As a member of the Construction Industry Scheme, this means that you can claim expenses on the miles that you drive to fulfil your contracts. As a PAYE worker, you are only able to claim mileage expenses when you are travelling to a temporary place of work.
Tools, equipment and uniform
Construction workers can claim for expenses such as demolition tools, access equipment or uniforms. This includes tools or items you have either purchased or hired to complete a particular job, such as safety protective clothing, power tools or laundry or repairment costs. As a Construction Industry Scheme worker, you can claim for the purchase and replacement of tools or equipment as a business expense. If you are a PAYE worker, you can claim for any tools or equipment you have paid for, but only if they were not available from your employer.
General business expenses
General business expenses are incurred in the daily running of your business, such as the costs incurred in maintaining a home office, public liability insurance, or union fees. As a Construction Industry Scheme worker, you can claim for all these expenses. However, a PAYE worker can only claim back for expenses related to their specific job role such as union fees or subscription fees.
Builder administrative costs
As a self-employed builder who is part of the Construction Industry Scheme, you will incur additional ‘admin’ costs that are closely related to your job but do not fit into other expense categories, such as postage costs, stationary costs or phone costs. PAYE workers do not normally incur these types of costs and therefore cannot use these expenses to claim back tax.
Travel and subsistence expenses
Travel and subsistence expenses are costs involved in travelling, eating and staying overnight for a temporary place of work as long as you are there for less than twenty-four months. As a Construction Industry Scheme worker, you will be able to claim for these expenses. However, as a PAYE worker, you will have one permanent place of work and therefore these expenses cannot be claimed unless you are temporarily required to work in a different place.
As a self employed builder, it is important to be aware of the types of expenses you can claim as either a Construction Industry Scheme worker or a PAYE worker. It is important to remember that to claim for your expenses, you must keep your receipts as evidence of your purchases and submit them when claiming for tax relief.
