CIS - Construction Industry Scheme

CIS is complicated if you don't keep on top of the paperwork and monthly filings

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Check out HMRC's guide to see if it applies to you http://www.hmrc.gov.uk/cis/intro/decide-if-cis.htm

 

As a contractor, you must:

• register for CIS

• check that your subcontractors are registered with HMRC

• pay subcontractors accordingly

• submit monthly CIS returns

• Pay CIS to HMRC

 

As a Subcontractor, you must register with HMRC; if you are not registered, contractors have to deduct the higher 30% rate instead of your invoice's registered 20% rate.

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Running a Limited Company under CIS

You can offset your CIS deductions taken from payments received against the following:

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• any PAYE payments due to HMRC

• your Class 1 National insurance contributions

• CIS deductions the company has made from its subcontractors

 

HMRC will repay any deductions that the company is not able to offset against its PAYE liabilities

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Under RTI, this is now done monthly using the EPS through payroll.

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Offsetting your Monthly or Quarterly CIS liabilities

It would be best to offset your CIS liabilities each month or quarter against your PAYE/NICs payments.​ This will either reduce your CIS payments or eliminate them 

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Suppose your liability is reduced to nil, and there are still some unused CIS deductions that have not been offset. In that case, you should carry these forward to the next month or quarter within the same tax year and don't forget to tell HMRC that you have no liability to pay over for that period.

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Suppose the company's CIS deductions available for offset in any month or quarter do not cover the whole of the company's liability for that period. In that case, you must pay over the balance to HMRC by the regular payment date.

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CIS Record Keeping

It would be best to record all the amounts offset against your monthly or quarterly liabilities.

 

Either use keep you own records or HMRC's CIS132 form - http://www.hmrc.gov.uk/manuals/cisrmanual/pdfs/cis132.pdf

 

Sign up for CIS

To sign up for the Construction Industry Scheme, please login into HMRC online service to register - https://online.hmrc.gov.uk/login

 

Help with CIS

We can help with your CIS management; please call to discuss your requirements.

 

HMRC have a dedicated helpline 0845 366 7899 if you get stuck or go online for further assistance

 

How to calculate paying your Subcontractors

Example 1: where the subcontractor is due £600 for their work and are verified with HMRC

• Gross pay £600

• CIS Deduction (£120) - 20% deduction, payable to HMRC

• Net payable to subcontractor: £480

Example 2: where the subcontractor is due £600 for their work and are NOT verified with HMRC

• Gross pay £600

• CIS deduction (£180) - 30% deduction, payable to HMRC

• Net payable to subcontractor: £420

 

Verifying and paying your sub-contractors

When you take on a new sub-contractor, you must verify them with HMRC

So what will you need?

• their name, or the name of their business or company

• their UTR - Unique tax reference

• their National Insurance number (if you know it) if they're a sole trader

• their company registration number if they're a company

Where to register them: Use HMRC's Online Services: https://online.hmrc.gov.uk/login