Construction Industry Scheme - Payroll Information from Stealth Bookkeeping
The Construction Industry Scheme (CIS) imposes a set of specific rules governing the payment of subcontractors working in the construction industry.
Contractors and the Construction Industry Scheme
If you are a contractor and wish to engage others to work for you, you must work out whether the relevant work falls within the remit of the CIS Determining whether a person is employed or self-employed is not always easy, and CIS accountants, Stealth Bookkeeping can you help to decide whether a subcontractor should be classified as self-employed.
Contractors will need to do the following under the CIS:
- Register for the scheme
- Make the appropriate deductions
- Issue payment statements to subcontractors
- Verify subcontractors with HMRC to establish whether payments should be gross or net
- Submit monthly returns to HMRC, even where no payments are made
- Keep appropriate records
Subcontractors and the Construction Industry Scheme
Subcontractors working under the Construction Industry Scheme must register with HMRC prior to beginning work and must keep the authorities informed of any changes to the business - for example, the address, structure, partners or name of business.
Subcontractors that register for CIS will be set up to receive payments 'under deduction', which means that contractors will deduct 20% from most of the value of the invoices and pay the sum direct to HMRC. If the subcontractors is not registered under CIS they will have tax deducted at the higher rate of 30%.
Deductions will not be made for the following:
- Construction Industry Training Board levy
- Materials
- Plant hire
- Consumable stores
- VAT
- Manufacturing or prefabricating materials
A subcontractor can apply to be paid gross, with no deductions, if their business meets certain qualifying conditions.
We can update you on the current regulations. For more help with your CIS needs, contact Stealth Bookkeeping today.