If you are involved in the Construction Industry Scheme (CIS) then you are required by HMRC to register under the CIS scheme. So if you are subcontractor and not registered, then who ever contracting you will end up deducting 30% of your income tax at source, but once you get registered with HMRC only then 20% will be deducted from your income. The deduction count as advance payments towards your tax liability and national insurance contribution due at year end to HMRC,.
The scheme can be used by the Self employed or through the Limited company, however different rules will apply, and if you are registered as a contractor then you will need to sign in to CIS online in order to file your monthly returns or to verify a subcontractor. But you can leave this to us and keep your focus on your business.
Who counts as a contractor or subcontractor
>> Register as a contractor if either:
- You pay subcontractors for construction work
- Your business doesn’t do construction work but you spend an average of more than £1 million a year on construction in any 3-year period
>> Register as a subcontractor
- If you do construction work for a contractor.
>> You must register as both if you fall under both categories.
>> Work covered by CIS Scheme:
- Most construction work
- A permanent or temporary building or structure
- Civil engineering work like roads and bridges
- Preparing the site, eg laying foundations and providing access works
- Demolition and dismantling
- Building work
- Alterations, repairs and decorating
- Installing systems for heating, lighting, power, water and ventilation
- Cleaning the inside of buildings after construction work
You don’t have to register if you only do certain jobs, including:
- Architecture and surveying
- Scaffolding hire (with no labour)
- Carpet fitting
- Making materials used in construction including plant and machinery
- Delivering materials
- Work on construction sites that’s clearly not construction, eg running a canteen or site facilities
To discuss how Accountants in Slough can assist you please contact us for a free, no obligation consultation on: 01753 373 505 or complete our Contact form and we will get back to you promptly.