Want to know what is CIS (Construction Industry Scheme), who needs to register as a contractor or subcontractor, what work does CIS cover, what are its exceptions and how to register for CIS. Whether you’re a contractor or a subcontractor, you should know all these points. So, read this post to find out!
What is CIS (Construction Industry Scheme)?
Similar to PAYE, the Construction Industry Scheme (CIS) requires contractors to make deductions from the payments of a subcontractor. These payments are sent to HMRC as advance tax and National Insurance.
Here, if you’re a contractor, you need to deduct 20% from the subcontractor’s payments if he/she is CIS registered. In case if the subcontractor is non registered, the contractor can deduct 30% of the subcontractor’s payment.
Therefore, both contractors and subcontractors need to register for the Construction Industry Scheme. Contractors are legally required to register for CIS. However, subcontractors can not register for it, but in this case, the deductions would be made at a higher rate from their payments.
Who Needs to Register as a Contractor and Subcontractor?
According to HMRC, a contractor is regarded as a contractor and needs to register if either:
- He/She pays subcontractors for the construction work
- You do not directly perform the construction work but have used over £3 million on construction in a year since the first payment has been made
In addition, you need to register as a subcontractor if you do work for a contractor. If you work as both contractor and a subcontractor, you need to register for both.
What Work does CIS Cover?
As per the guidelines of HMRC, all construction work undertaken in the UK is included under CIS. It includes work done for both the permanent/temporary structure and civil engineering work, including:
- site preparation
Whether you’re a company, a partnership, or a sole trader, you need to register for this scheme.
Other than the above-discussed works, some jobs are not covered by CIS. These include:
- carpet fitting
- delivery of materials
- scaffolding hire (with no labour)
- things used for construction like plant and machinery
- work done on construction sites that are not related to construction, like running a hostel/canteen or security services/site facilities
How to Register as a CIS Contractor/Subcontractor?
To register for CIS as a contractor, you are required to provide us with the information for registering as a CIS contractor. We’ll contact HMRC on your behalf to set up a Contractor Scheme for you (and PAYE if required). The information required to register for CIS is as under:
Business or trading name
National Insurance number
Unique Taxpayer Reference (UTR)
- VAT Number
If you’re a sole trader, you can register for CIS using UTR and Government Gateway ID and the password for self-assessment (if you are not registered for self-assessment, register now)
If you’re a limited company, you are required to fill the company registration form. And partnership needs to fill in their partnership registration form.
Reach out to our contractor accountants to register for CIS!
Quick Sum Up
After reading this short post, you have got basic information of what is CIS (Construction Industry Scheme), who needs to register, what work does CIS cover, what are its exceptions and how to register for CIS. Bear in mind the topic of the Construction Industry Scheme is too broad and this blog is just a basic overview of the CIS. However, HMRC has provided a detailed guideline about the Construction Industry Scheme that answers all your queries. Few changes have been made on 6 April 2021 by HMRC. To get more information, you should visit the HMRC website.
Here at Cheap accountants in London – we deal with all sorts of clients from the Constructions industry scheme, whether you are working as a contractor or subcontractor we have extensive experience in dealing with CIS contractors. If you are looking for the best C.I.S accountants feel free to contact us.
Disclaimer: This content is just for your general information on the given topic.