CIS We can calculate & arrange all you CIS requirements...
We can assist you with all aspects of CIS from registration to the completion of contractors returns.
Complete CIS management service
If you work in the construction industry, whether as a contractor, subcontractor or on a construction site as part of your day-to-day duties, the work you carry out may fall under the Construction Industry Scheme.
We offer a complete service; verification of each of your subcontractors to determine the level of tax to deduct from them, providing the subcontractor with the necessary statements that are required by law, filing the monthly returns to HMRC and telling you what you need to pay and when.
Completing all of this on your behalf will avoid late filing penalties and ensure tax is reclaimed or paid correctly.
What does CIS stand for and what is it?
CIS stands for Construction Industry Scheme and it means contractors deduct money from a subcontractor’s payments and pass it HMRC. The money deducted counts towards the subcontractors National Insurance and tax.
Contractors must register for the scheme, but subcontractors do not have to however, they will have a higher percentage of pay deducted if they do not.
Who counts as a contractor?
You must register for the scheme if you pay subcontractors for construction work or if your business does not do construction work but you spend an average of more than £1 million a year on construction in a 3 year period.
How much CIS do I deduct from subcontractors?
There are 3 different rates of deduction: -
- 20% for registered subcontractors
- 30% for unregistered subcontractors
- 0% for subcontractors who have ‘gross payment’ status.
How do I work out their net pay?
Start with gross amount
- Consumable equipment
- Fuel used (except for travelling)
- Equipment hired for this job
- Manufacturing or prefabricating materials
- Then deduct the CIS percentage (as given to you by HMRC)
The total left is the amount you need to pay the subcontractor.
What is ‘gross payment’ status?
Gross payment status must be applied for by the subcontractor through HMRC. To qualify for gross payment status, you must have paid your tax and National insurance on time in the past, do construction work in the UK and run your business through a bank account.
As well as the above there is also a turnover test. For sole traders, turnover must be at least £30,000. Partnerships must have £30,000 per partner or at least £100,000 in total. Limited companies must have £30,000 per director or at least £100,000 in total.
HMRC will review your business every year to decide whether you still qualify for your status.
What do I need from my subcontractors?
You must verify your subcontractors with HMRC before you pay them for you to know how much tax to deduct. To do this you will need:
- National Insurance number and UTR for sole traders
- National insurance number, UTR and partnership UTR for partnerships
- Company registration number and company UTR for limited company’s
In order to all HMRC you will also need your UTR, the reference number for your HMRC accounts office and your HMRC employer reference.
Can my accountant/bookkeeper do this for me?
Codex can undertake all aspects of CIS for you, and be able to verify your subcontractors for you if you wish them to do so. They will also be able to work out the tax deductions for you if they are also doing your payroll.
Changes you need to report to HMRC
You can report changes by calling the Construction Industry Scheme helpline.
You must tell them if:
- You change a sole trader to a partnership
- Leave a partnership or company to become a sole trader
- Create a company or change your business to a company
- Change trading name
- Change your business, private or registered office address
- Stop trading
- Add new shareholders.
If you do not report changes to HMRC within 30 days HMRC may withdraw your gross payment status.