Everything you need to know about CIS

If you have worked in the construction industry for a while, you may be familiar with the term CIS, which stands for the Construction Industry Scheme. This is a scheme in which contractors deduct money from a subcontractor’s payment before they receive it, and pass it to HM Revenue & Customs. These deductions are used for the subcontractor’s National Insurance and tax payments.

How do I register for the CIS?

Contractors must register for CIS if:

  • They pay subcontractors
  • They aren’t in the construction business, but they have spent more than £3 million on construction in the 12 months since they made the first payment

Registering for the CIS is straightforward and will allow you to be certain about the finances you are paying your subcontractors.

It isn’t essential for subcontractors to register with CIS; however, it is beneficial for you to do so. By registering as a subcontractor, you will receive a lower deduction rate than if you aren’t registered, with only 20% of your wages being paid into the scheme before you receive them.

Construction jobs that are not included in CIS

There are some exceptions to CIS. If your company hires subcontractors to carry out the following jobs, then you will not need to register for the CIS for these payments. These jobs include:

  • Architecture and surveying
  • Hiring scaffold
  • Fitting carpets
  • Delivering materials
  • Working on construction sites, but not in a construction capacity

How do I know if I am a subcontractor or if I hire subcontractors?

Sometimes it can be tricky to tell the difference between a subcontractor and an employee. You are a subcontractor if you don’t have a regular employment contract with the construction company, but you provide them with your labour services. You won’t be entitled to holiday or sick pay, and you will operate using your own tools. You should also have insurance to cover your work.

As a contractor, why should I hire an accountant?

As a contractor, hiring an accountant to help you with your CIS returns can be beneficial. They can aid you in the process of differentiating employees from subcontractors and can get your subcontractors set up so that they receive the correct deductions. The accountant will also calculate these deductions and submit the information to HMRC on a monthly basis, taking this burden off your shoulders.

As a subcontractor, why should I hire an accountant?

For subcontractors, it can be much easier to keep on top of your finances if you have some help. An accountant can help you register with CIS, which is important to ensure you receive good deduction rates. They will also help you in the completion and submission of tax self-assessments each year, calculating if you are due a rebate.

What are the benefits of the Construction Industry Scheme?

There are a series of benefits that you can reap due to registering with the Construction Industry Scheme and working with an accountant:

  • Don’t stress about calculations

    Whether you are a contractor or a subcontractor, you won’t need to stress about calculating deductions. This will all be handled by the accountant.

  • Never chase payments

    As a subcontractor, your payments can sometimes be forgotten. Working with an accountant and the CIS, your payments will be regular. If they are missed, it will be easy to chase them up.

  • Benefit from lower deductions

    As a subcontractor, registering with the CIS with the help of an accountant will mean that you can benefit from a lower deduction rate, at 20%. You can be more in control of your finances.

To benefit from the simplicity of working with a top standard accountancy company, come to Adams Accountancy. Our services can help you register for CIS seamlessly, as well as helping you make sense of your finances. Give us a call on 01322 250 001 or email info@adams-accountancy.co.uk.

July262022