Tax can be a confusing subject. With all of the legislation and terminology, it’s easy to get bogged down. Our tax dictionary is here to help you understand some of those taxing terms.
We’ve put together some of the most frequently used terms to make life easy for you when tax-time rolls around.
Construction Industry Scheme (CIS)
The Construction Industry Scheme (CIS) is a scheme established by HMRC to direct how payments should be handled by subcontractors and contractors to HMRC. Under the scheme, subcontractors will be required to pay 20% upfront to contractors.
Contractor
A contractor is a self-employed worker who is hired by a company to complete a task for a period of time.
Expenses
If you have incurred any costs for your business, you can claim tax relief as long as they are used wholly and exclusively for the purpose of the business. For a list of allowable expenses, take a look at our guide to expenses.
HMRC
Her Majesty’s Revenue and Customs (HMRC) is the department that is responsible for tax.
National Insurance
National Insurance (NI) contributions are deductions from your wages which are used to pay for a number of state benefits.
Pay As You Earn (PAYE)
Pay As You Earn (PAYE) is the method of paying Income Tax and National Insurance contributions. If you’re working under PAYE, your employer will deduct Income Tax and National Insurance from your wages before paying you.
Self-assessment
This is the process of giving details of your income and profit to HMRC in the form of a tax return.
Subcontractor
A subcontractor is a worker who is employed by a contractor.
Tax rebate
This is the money HMRC will refund back to you if you have overpaid in tax. In order to claim your tax rebate, you will need to complete a tax return form.
Tax return
This is the documentation you will need to complete in order to claim your tax rebate. You will be required to include your income, earnings and personal circumstances.
Tax year
The tax year starts on 6th April every year and runs until 5th April the following year.
Help with your tax rebates
Having the right support can make all of the difference when it comes to your money. The team at Baa Accounting are experts in all things tax, so you can rest assured that you’ll always receive the best advice possible.
To find out how we can help you to claim your tax rebate, simply get in touch with us.
