Construction Industry
If you are an accountant working in the construction industry in London then you have to know about construction scheme deductions. It is important for you to be aware of the different scheme deductions and how these can help you save money in the long run. You will be surprised with the many different deductions that you can get if you work in this field. There are different ways that you can deduct your costs from your income and it is important that you take note of every single one of them. By keeping a complete diary of your expenses you will be able to see what you can get deductions for and what is not allowed.
Total Cost of all Materials
The construction industry scheme deductions start with the total cost of all materials, work and supplies that you purchase or acquire and then include the amount of interest that you have to pay on them. You cannot claim for interest on mortgage payments or loan payments. You also cannot claim for any repairs on the building. The only exception is when you receive payments from your sub-contractors. In this case, you can claim for the interest on the principal payment plus the amount that your subcontractors would pay you. Any payments that you make to your subcontractors have to be included in your personal expenses.
Principal Payments
If you are a sole proprietor then you can claim the amount of interest that you have to pay on loans and mortgages as well as any other principal payments that you have to make to your property. However, you are only able to deduct up to 50% of the total amount of money that you spend on any one construction industry scheme deductions. There are some common ways in which you can limit the amount that you have to claim. These include:
Individual Contractors
If you are a sole proprietor and you hire one person to do the construction work on your project then you can only claim the interest on that one construction work. However, you cannot claim for contractors’ fees or individual expenses for any part of the construction industry scheme deductions. In addition, if the person you hire is not a licensed contractor but he does a good job for you then you may also claim the fees he charges for various services provided. The total amount that you can deduct will depend on the extent of work done by the contractor and the services he offers.
Sub-Contractors
If you are a subcontractor then you are considered an independent contractor. This means that you will not have to provide any guarantee or insurance for the construction work that you do. This can help you save on various deductions including the tax. However, it can increase your tax burden because you will have to pay the taxes applicable to independent contractors.
Construction Workers
If you are working as a construction worker then you are generally not required to provide any guarantee or insurance for the service that you render. You are however, responsible for paying the tax on the portion of the construction cost which you cover yourself and the contractor is responsible for the next payment made by you after the completion of the construction operation.
Employees Engaged in Construction Services
If you are an employee in a construction company then you are considered a subcontractor and are not entitled to the same kind of deductions as the regular employees. You are however, eligible to make your contributions to the superannuation and if you avail of these benefits then you will have to pay income tax at the appropriate rate.
General Factor
When you are a construction worker, you are considered to earn less than the normal rate of earnings. For this, you need to include the expenses on construction materials and equipment in your gross payment. Even the cost of operating the construction machinery and tools used in the construction works is also included in the gross payment. The general factor must be deducted in the scheme of scheme deductions.
