How to Calculate Taxes as a CIS Builder in the UK (2025)

1. Know Your Income and CIS Deductions

• Gross Income: The total amount you earn before deductions.

• CIS Deductions: Typically, 20% of your pay is deducted by contractors (30% if you're not registered with CIS). These deductions count as advance tax payments.

2. Deduct Allowable Expenses

To figure out your taxable income, subtract your business expenses from your gross income. Common expenses include:

• Tools and materials.

• Travel costs (e.g., fuel, vehicle maintenance).

• Business insurance.

• Office or home office costs.

3. Calculate Your Taxes

Taxes are based on your taxable income:

Income Tax (2025 Rates):

• £0–£12,570: Tax-free (personal allowance).

• £12,571–£50,270: 20%.

• £50,271–£125,140: 40%.

• Over £125,140: 45%.

National Insurance Contributions (NICs):

• Class 2 NICs: £3.45 per week if profits are over £12,570.

• Class 4 NICs:

  • 10.25% on profits between £12,570 and £50,270.

  • 3.25% on profits above £50,270.

4. Example Calculation

Let’s say:

• You earned £50,000.

• CIS deductions were £10,000.

• Business expenses were £10,000.

Steps:

1. Taxable Income: £50,000 - £10,000 (expenses) = £40,000.

2. Income Tax:

   • First £12,570: No tax.

   • Remaining £27,430 (£40,000 - £12,570): Taxed at 20% = £5,486.

3. NICs:

   • Class 2: £3.45 × 52 weeks = £179.40.

   • Class 4:

     • £37,700 taxed at 10.25% = £3,864.25.

     • £2,300 taxed at 3.25% = £74.75.

   • Total NICs = £4,118.40.

4. Total Tax and NICs: £5,486 + £4,118.40 = £9,604.40.

5. CIS Offset: Subtract your £10,000 CIS deductions. You’ll get a refund of £395.60.

5. File Your Self-Assessment

• Submit your tax return online by 31 January 2026.

• Include all income, expenses, and CIS deductions.

Key Tips

• Keep Records: Track all income and expenses to make tax filing easier.

• Claim Your Refund: If your CIS deductions are more than your tax bill, you’ll get a refund.

• Hire Help: An accountant can save you time and ensure accuracy.