Invoicing your customers
You'll invoice your customers as normal, for the full value of the work done. Don't deduct the tax from this invoice, or your income will be too low.
That means that your customer, the contractor, will pay you less than you invoiced them for. That'll either be 30% less if you're not registered as a subcontractor with HMRC, or 20% less if you are.
Use this method to make sure that your invoices are shown as fully paid.
How should I explain the payment that FreeAgent creates?
That depends on your company type.
Sole trader, or partner in a partnership
To make sure you're not taxed twice on your existing CIS deductions, you should enter these on the Self Employment page of your Self Assessment form. If you're using the short version of the form, enter them in box 38, and if you're using the long version, enter them in box 81.
Further information about the CIS is available from HRMC.
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