The dramatic increases on 6th April, 2011 in the income tax personal allowance (from £6,475 to £7,475) and the National Insurance Class 4 lower profits limit (from £5,715 to £7,225) will mean that most sub-contractors who are stopped the main rate of CIS tax (20%) will be entitled to larger rebates on their 2011/12 tax returns than in the previous year. This is despite the 1% increase in the Class 4 NI rate from 8% to 9%.
For example, in 2011/12, a CIS sub-contractor with CIS sales totalling £20,000 and tax-deductible costs of £2,000 will get a rebate of £745 (compared to £552 on same earnings in 2010/11.).
Assuming the same tax-deductible costs of £2,000, the level of CIS sales at which no rebate is payable rises to c£30,000 (from £29,000).