CIS We can calculate & arrange all you CIS requirements...
We can assist you with all aspects of CIS from registration to the completion of contractors returns.
Who counts as a contractor?
You must register for the scheme if you pay subcontractors for construction work or if your business does not do construction work but you spend an average of more than £1 million a year on construction in a 3 year period.
How much CIS do I deduct from subcontractors?
There are 3 different rates of deduction: -
- 20% for registered subcontractors
- 30% for unregistered subcontractors
- 0% for subcontractors who have ‘gross payment’ status.
How do I work out their net pay?
Deduct the CIS percentage (as given to you by HMRC) from the labour element (before vat) and pay the remainder.
What is ‘gross payment’ status?
Gross payment status must be applied for by the subcontractor through HMRC. To qualify for gross payment status, you must have paid your tax and National insurance on time in the past, do construction work in the UK and run your business through a bank account.
As well as the above there is also a turnover test. For sole traders, turnover must be at least £30,000. Partnerships must have £30,000 per partner or at least £100,000 in total. Limited companies must have £30,000 per director or at least £100,000 in total.
HMRC will review your business every year to decide whether you still qualify for your status.
What do I need from my subcontractors?
You must verify your subcontractors with HMRC before you pay them for you to know how much tax to deduct. To do this you will need:
- National Insurance number and UTR for sole traders
- National insurance number, UTR and partnership UTR for partnerships
- Company registration number and company UTR for limited company’s
In order to all HMRC you will also need your UTR, the reference number for your HMRC accounts office and your HMRC employer reference.
Can my accountant/bookkeeper do this for me?
Codex can undertake all aspects of CIS for you, and be able to verify your subcontractors for you if you wish them to do so. They will also be able to work out the tax deductions for you if they are also doing your payroll.
Changes you need to report to HMRC
You can report changes by calling the Construction Industry Scheme helpline.
You must tell them if:
- You change a sole trader to a partnership
- Leave a partnership or company to become a sole trader
- Create a company or change your business to a company
- Change trading name
- Change your business, private or registered office address
- Stop trading
- Add new shareholders.
If you do not report changes to HMRC within 30 days HMRC may withdraw your gross payment status.
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