My brother has just started his first full-time job as a labourer in construction and we’re trying to understand how CIS/self-employment works.
Previously he worked under PAYE, so tax was all handled automatically. Now he’s been told he needs to register as self-employed, get a UTR, and register for CIS.
From what I understand:
* The contractor deducts 30% if you’re not registered, and 20% once they have your UTR
* Those deductions are paid to HMRC towards tax (and possibly NI?)
* He should receive CIS statements/payment statements each time he gets paid and keep these records
* He should also keep track of income/expenses (spreadsheet, bookkeeping, etc.)
* Then he’ll need to complete a Self Assessment tax return by 31 January each year
* HMRC then works out whether the CIS deductions already cover his Income Tax and National Insurance, whether he owes more, or whether he gets a refund
A few things I’m unsure about:
* Do CIS deductions definitely cover National Insurance as well, or just Income Tax?
* Does he need to register for both Self Assessment and CIS separately, or does one cover both?
* Is software like Xero or QuickBooks actually needed for someone like him, especially with MTD rules, or is a spreadsheet enough for now?
* When do most people submit their tax return, well before January, or close to the deadline?
* Are there any good HMRC guides, YouTube videos, or beginner-friendly resources specifically for CIS labourers who are completely new to self-employment?
He’s never been self-employed before so we just want to make sure he starts properly and doesn’t miss anything important.
Would really appreciate advice from anyone who works under CIS or deals with this regularly.